In Focus

CII Responds to Calls to Limit Share Buybacks

Lawmakers should be cautious about making it too difficult for companies to recycle excess cash back to investors through stock repurchases, CII said in a statement in response to an op-ed by Senators Chuck Schumer and Bernie Sanders that is critical of stock buybacks. In many cases, buybacks will be the optimal capital allocation decision. CII noted that shareholders generally reinvest cash from buybacks into companies they believe hold promise, helping to fuel the growth of firms that are powering the U.S. economy. Tying companies’ hands on capital allocation could lead executives to pour money into wasteful businesses that falter or fail to create additional jobs. And there is no compelling evidence that companies that repurchase their own shares fail to invest in research, development, human capital or equipment. CII noted, however, that buybacks done to boost the company’s stock price in the short-term are not appropriate. CII supports robust disclosure by corporate boards about the rationale for buybacks, and management disclosure of how buybacks affect performance metrics.

CII Urges SEC to Use Blockchain to Fundamentally Change Proxy System

In a follow-up comment letter submitted January 31 in response to the SEC's November 15 roundtable on the proxy system, CII urged the Commission to take the lead on improving the proxy voting infrastructure by fostering the use of innovative technology and ensuring end-to-end vote confirmation. "Technological change now offers the opportunity to construct a better system of share ownership based on traceable shares," the letter said, "We have proposed private, permissioned blockchains as one technology the SEC should consider.” CII suggested that the SEC provide case-by-case regulatory relief for companies from requirements to use the current system, permitting them to elect to place their shares on a blockchain. In the near-term and within the context of the current system, CII urged the SEC to issue guidance requiring pre-reconciliation of positions to enable reliable and routine end-to-end vote confirmation.