We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon
Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
From 2008 to 2012, GE spent $12.2 billion to redeem 583 million shares at an average price of $21. The buybacks accelerated from 2013 to 2015, when it paid $15.6 billion for 616 million shares ($25.32 per share), and took another jump in 2016 through 2017, when it paid even more––$29.76 on average––for the biggest chunk yet, 874 million shares.
All told, over the decade ended at the close of 2017, GE spent $53.9 billion to repurchase 2.07 billion shares, at average prices of $26. At today's $8.38, GE could buy the same number of shares for less than one-third that amount, or $17.4 billion. Hence, GE has wasted a staggering $36.5 billion overpaying for its overpriced stock. That amount, what investigative accountant Albert Meyer calls "destruction of capital," is equivalent to half of GE's current market cap of $71 billion. To make matters worse, repurchasing 2.07 billion shares has lowered the share count by 1.9 billion shares or 8% less than that over the decade. The reason: GE made large options grants to its top managers over those years that eventually vested, requiring the company to issue new shares that diluted its stock.
