Government launches review of share buy backs

The Department for Business, Energy and Industrial Strategy has commissioned research into whether companies are repurchasing their own shares to artificially inflate executive pay. The research is part of a broader package of corporate governance initiatives announced last summer to address concerns that executive pay is ‘sometimes disconnected from company performance’.

The government has appointed consultants PwC to undertake the research into share buybacks and will be supported by Professor Alex Edmans, a leading academic at the London Business School. The findings will be published later this year.

Business secretary, Greg Clark, said:

‘The UK is rightly recognised as having a world-leading business environment and responsible business practices – a key part of our industrial strategy. But there are concerns that some companies may be trying to artificially inflate executive pay by buying back their own shares. This review will examine how share buyback schemes are used and whether any action is required to prevent them from being abused.’