Honestly, I think the thing that got Pat fired was agreeing to suspend stock buybacks for five years as part of the CHIPS act money deal. The Board needs to be able to prop up their investments.
Companies should focus more on their nominal products/services and spend less time playing games with money.
Already is. There's a reason why many quant finance books model stock prices as martingales/random walks.
Dividends
> dividends are highly discouraged by taxation
This is only true today because buybacks aren't taxed
Buybacks are ultimately a way of saying "we don't have a better way to spend this money." Consider that, in a world without buybacks, execs have two choices. One is to pay dividends, and eat the tax implications. The other is to find productive ways to spend the money to increase the company's earnings. The taxation of dividends strongly motivates companies to innovate. Buybacks weaken that motivator significantly, because there's no tax implication. It's financial engineering and not a productive use of money.
Buybacks are also a pretty neat way for insiders to enrich themselves at the expense of shareholders.
Example: Insiders schedule a sell of their shares to occur right after announcing a buyback plan.
So any talk of incentives should include a justification of passive investment being more valuable than work for income, if someone is asking for favorable tax treatment.
What changed in the 80’s is that a safe harbor was created. Before that companies were at risk of being charged with market manipulation - there were no clear rules on what was market manipulation and what wasn’t.
The safe harbor rule 10b-18 simply laid out requirements for buybacks fell into a “safe harbor”, presumed to not be market manipulation.
But companies could still do them before that, but it was more risky.