Share buybacks explained: why a $20bn authorisation isn't $20bn spent

GE Vernova's board doubled its buyback authorisation to $20bn in October 2026. That is a ceiling: its 28 October release says it had bought 15.6 million shares for $9.9bn since December 2024, leaving $10.1bn. Cadence, which announced an extra $2.5bn on 26 October, says its programme "may be modified, suspended or terminated without prior notice".

A buyback is a company purchasing its own shares. In open-market buying, a broker buys on the exchange over time. In an issuer tender offer, every holder may sell within a limited period on fixed terms, usually at a premium; for most offers, SEC rules require a Schedule TO filing and give holders withdrawal rights and one price for all, Investor.gov explains.

In an accelerated share repurchase (ASR), a bank delivers a first batch of shares for an upfront payment; the final count follows from the volume-weighted average price (VWAP) over the term, less a discount. ResMed's 8-K of 1 September 2026 set the initial delivery at 80% of its $450.0m payment divided by the 2 September closing price. Hilton Grand Vacations' 30 October 8-K says its $200m ASR brings about 4.48 million initial shares, with final settlement expected by 31 December 2026.

A buyback does not raise profit; cash leaves the company. It shrinks the share count behind earnings per share (EPS), so each remaining share owns more. Hypothetically, $100 of profit over 100 shares is $1.00 a share; over 95 shares, about $1.05. FedEx's 28 October release says about 6.3 million shares bought for $2.0bn, in open-market and ASR deals, from June to September 2026 added $0.02 per diluted share to third-quarter results.

A dividend goes to all shareholders, usually on a fixed schedule; a buyback pays only those who sell. In the 12 months to September 2025, S&P 500 companies spent what S&P Dow Jones Indices called a record $1.020 trillion on buybacks and $664.9bn on dividends, its 18 December 2025 release shows, and 17.1% of them cut their EPS share count by at least 4% year on year in Q3 2025.

Neither safe harbour is mandatory: Rule 10b-18 says buying outside it raises no presumption of manipulation, though Item 703 reporting applies either way, and MAR's is framed as an exemption. The SEC's 2023 Share Repurchase Disclosure Modernization rule was vacated by the US Fifth Circuit appeals court on 19 December 2023, and the prior rules apply again, the SEC says. MAR grants the EU exemption only to buybacks that cut capital or meet exchangeable-debt or employee-share obligations. Where EU states allow buybacks, a general meeting must normally authorise them, for at most five years, though national law may allow some exceptions (Directive 2017/1132).

Section 4501 of the US tax code charges listed US corporations 1% of the fair market value of stock repurchased after 31 December 2022, net of stock issued in the same year, including to employees; years with no more than $1m of repurchases are exempt. Companies figure it on Form 7208, attached to Form 720, says the IRS. S&P DJI said the tax reduced S&P 500 operating earnings for Q3 2025 by 0.36%, and as-reported GAAP earnings by 0.41%.