Many companies pay a meaningful part of employee compensation in shares. Those shares are new. Every grant that vests pushes the share count up, and someone has to buy them back just to keep the count level. For a large technology company that someone is the company itself, spending billions a year on what is really a salary expense routed through the capital markets.
Gross, net and what you keep
Net buyback = Cash spent on repurchases − Value of shares issued
Suppose a company worth $500 billion spends $15 billion on repurchases (a 3% gross buyback yield) and issues $10 billion of stock to employees. The net buyback is $5 billion, or 1%. A shareholder's slice of the company grows by about 1% a year, not 3%. The other two percentage points were compensation.
Why this is easy to miss
- Press releases quote the gross figure and the size of the authorisation.
- Stock-based compensation is a non-cash expense in the income statement, so it never appears as cash leaving the business.
- Companies report 'adjusted' earnings that exclude stock compensation entirely, so the cost disappears from the headline profit as well.
- Some data providers report repurchases net of issuance without saying so, which is why figures differ between sources. Ours come straight from the cash-flow statement line the company reported.
How to check it in ten seconds
Open any company page on this site and look at the shares-outstanding chart. If the company reports billions in buybacks and the line is flat, the buyback is a treadmill. If the line falls steadily, the buyback is real. The five-year share count change in the rankings does the same job for the whole universe at once.
Treasury shares in Europe
European companies often hold repurchased shares as treasury stock rather than cancelling them, sometimes specifically to deliver them to employees later. Those shares still count as outstanding for ownership purposes in most reporting, but check whether the company reports its count including or excluding treasury shares when you compare across borders.