I wasn’t sure how to phrase the title more precisely, so I welcome suggestions or edits.
Companies spend 65% of their profits on buying back their shares
because CEOs are incentivised to jack up the share price of their
stocks through hefty bonuses.
Here’s my question: often when I’m writing a sentence like the above, I end up in this awkward position where I’ve got two facts (excuse my probable abuse of terminology here):
- CEOs are being incentivised.
- Share prices are going up.
and my explanation/justification is:
- Hefty bonuses.
From the context, it’s almost clear that hefty bonuses are a justification for 1 and not an explanation of 2.
But how do I make this very clear without verbiage? After I’ve written the first two facts, I feel I’ve laid a rhetorical trap for myself. What are my escape routes?
PS. I wasn’t sure about how to best phrase the title or which tags to choose, so please feel free to suggest or edit.
The sentence you’ve written is both overstuffed and underdefined. It tries to make an argument that could easily fill at least a paragraph; but it omits crucial details that would give the argument force and clarity, and it creates needless ambiguity in its placement of one particular phrase.
In reading the sentence
Companies spend 65% of their profits on buying back their shares because CEOs are incentivised to jack up the share price of their stocks through hefty bonuses.
my first thought is, what companies spend 65% of their profits on share buybacks? Is this a computed average figure for all publicly traded companies in a certain country or region during a certain period? If so, where did the figure come from, what part of the world does it refer to, and what period does it cover? If not, what does the figure represent, and what is its source? Also, are you talking here about net profits, gross profits, or something else?
Answering those questions satisfactorily would take at least one complete sentence, even if you limited yourself to cursory coverage of each question. For example,
During the three-year period from January 2018 to December 2020, publicly traded companies in the United States spent, on average, 65% of their net profits on stock buybacks, according to SEC filing data.
Once you’ve established where the 65% statistic came from, what companies it covers, and for what period, you can move on to the next step in the argument: the assertion that the reason companies buy back stock shares is to raise the price of the shares. It is perfectly reasonable to say this in a separate sentence:
The main purpose of such buybacks is to increase the share price of a company’s stock.
Now you need to explain why achieving higher share prices is so important to CEOs. The original wording on this point—"CEOs are incentivized to jack up the share price of their stocks through hefty bonuses"—is somewhat garbled, as it attaches "through hefty bonuses" to "jack up the share price of their stocks" instead of to "incentivized" (which is the more logical connection to make). That is, you presumably want to say that CEOs are incentivized, through bonuses that are tied to the stock share price, to do everything they can to ensure a high share price when bonus time comes around—and you don’t want to say that CEOs are incentivized to use their bonuses to jack up the share price of their stocks.
To express this idea clearly, you would do well to dedicate a third sentence to it. This would also be an opportune time to indicate how widespread this phenomenon is—by mentioning whether "some," "many," "most," or "all" CEOs have their bonuses tied to share price in this way—and to note the method used to determine the stock price value for purposes of calculating CEO bonuses. For example,
But the reason CEOs tend to be so interested in securing a high share price for their company’s stock is that the vast majority of them receive bonuses on the basis of the company’s average share price at the end of each quarter of the fiscal year.
That would give you the following revision of the original sentence:
During the three-year period from January 2018 to December 2020, publicly traded companies in the United States spent, on average, 65% of their net profits on stock buybacks, according to SEC filing data. The main purpose of such buybacks is to increase the share price of a company’s stock. But the reason CEOs tend to be so interested in securing a high share price for their company’s stock is that the vast majority of them receive bonuses on the basis of the company’s average share price at the end of each quarter of the fiscal year.
An alternative approach would be get rid of (on the one hand) the unsupported statistical detail about 65% of companies’ profits and (on the other hand) the unmodified references to "companies" and "CEOs," which read as if you are inviting readers to assume that you are talking about all companies and all CEOs, and instead speak in broad but carefully hedged generalities. You could manage this in a single sentence, but I see no reason not to use two:
Many companies spend a large portion of their profits on stock share buybacks. Because executive bonuses are frequently tied to the share price of the company’s stock, CEOs may have a powerful incentive to keep that price high.
To sum up, the only syntactical problem with your original sentence is the ambiguity resulting from the end-of-sentence placement of the phrase "through hefty bonuses"—which you could cure by moving it to follow immediately after "incentivised." But the larger problem with the sentence isn’t that it is long, but rather that it is far too short and incomplete to persuasively present the argument you seem to want it to make.
Source : Link , Question Author : piccolo , Answer Author : Sven Yargs