One solution is to prohibit share sales by top executives during share buybacks; another is to disclose valuations at which buybacks would make sense
SOME investors may have had mixed feelings about DBS chief executive Piyush Gupta selling 300,000 shares earlier this month, right after the banking group reported strong financial results for Q3 2024 and unveiled a S$3 billion share buyback programme.
Share buybacks are often taken as a signal from a company’s board and management that its business is thriving, and that its share price might be too low. Yet, one could argue that the sale of shares by a company’s CEO sends the opposite message.
It did not help that DBS shares soared immediately after the earnings report and the share buyback announcement on the morning of Nov 7, while the disclosure of Gupta’s sale of DBS shares came only on Nov 11 – creating the sense that he had benefited from the excitement about the share buyback programme.
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