>Unlike dividends, they don't return money to all shareholders,
That's false reasoning in so many level. Take every of your arguments and do counterfactual and you see.
> leads to perverse incentives and underinvestment
Investing is not alternative to paying dividends in any well managed company. Companies invest if they see better ROI for the investment than elsewhere. They give money back to shareholders (either dividends or buybacks) when they can't do better than markets.
The positive ROI may accrue primarily to the top executives who are in a position to directly make that decision. Especially in a field like semiconductor processing where risks are high on new investment, it is almost always a lower risk decision to buyback the stock. I don't know the specifics of Otellini's pay package, but I would assume that his tenure resulted in massive wealth for himself, so this is certainly rational economic behavior but severely damaged the company.
Well the other part is that a big part of share buybacks are simply "sanitizing" the dilution from stock based comps(which are increasingly the way that most people get paid).
Intel SBC was 3.2 billion in 2023, and there haven't been any buybacks I think the last 2-3 years? Quite a bit of dilution which doesn't really make long term investors happy.
That's false reasoning in so many level. Take every of your arguments and do counterfactual and you see.
> leads to perverse incentives and underinvestment
Investing is not alternative to paying dividends in any well managed company. Companies invest if they see better ROI for the investment than elsewhere. They give money back to shareholders (either dividends or buybacks) when they can't do better than markets.