I've read that there will be a stock buyback as well as asset sales and more layoffs. In addition there hasn't been a raise given for 2 years and layoffs are a constant water cooler topic. I understand a buyback can help the stock price, but seems like at some point the toll on moral will cause problems at this place. Doing all of these things to save some money only to purchase shares? I understand business is business, but people's output is directly related to how they feel they are valued. And from a lot of these posts it appears a lot of employees feel disgruntled and unhappy. Maybe someone could comment regarding moral and the impact this buyback to prop up the stock price is having. Most studies show there is a direct correlation between productivity, turnover etc. based on job satisfaction.
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Follow rhe money. Hate to be cynical, but just ask yourself who benefits. Executive compensation structure is why Conoco and Phillips merged in the first place. There's only one good thing that's come out of the last 2 years: all the naive folks with their rose-colored-glasses get to see how the world really works and what really motivates people. It's a sick world.
Asset sales are necessary from time to time. Proceeds should go to fund capital projects and/or reduce debt burden. The purchase of shares telegraphs that a company lacks commercially viable projects and/or possesses a strong balance sheet...or questionable allocation/use of funds. Purchasing shares may reduce future dividend obligations but really make sense if it is intended to re-issue at a later date at a higher market price....however would dilute future market value and increase future dividend burden. COP should use sale proceeds to reduce debt burden followed by funding of investment opportunities.
Stock buyback isn't synonymous with debt reduction. In fact many companies get into trouble propping up share price by way of buybacks financed by additional debt that hurts their credit rating. http://www.investopedia.com/ask/answers/033015/how-does-it-affect-companys-credit-rating-buy-back-shares.asp
Read a corp finance book....it is the smart play...they are managing a billion dollar corp..investors don't like debt...if they get a bad credit rating for any reason layoffs will get a lot worse and conoco will get desperate.
no more coffee in the offices
ConocoPhillips: It's not just what we do. It's how we do it...
Read the previous post about Champs compensation plan and you will see why he wants to buy back stocks. The majority of his compensation is in stocks so the more he buys and tries to raise the price, the more money he puts in his pocket. It is simple greed.