US investment bank Lehman Brothers said today it will boost its annual dividend by 20 per cent and buy back up to about a fifth of its shares to offset employee stock grants and pare down excess capital.
Lehman's board sanctioned a plan to buy up to 40 million shares this year, offsetting the negative impact of employee stock grants on per-share earnings. Lehman also is prepared to buy an additional 15 million shares this year to offset the dilution of expected 2007 grants.
The plan's combined 55 million shares, worth $7.45 billion, would represent about 20 per cent of Lehman's 271.4 million shares outstanding at the end of November.
The first increased quarterly dividend of 24 cents a share, up from 20 cents, will be payable on February 21st. Through the increased dividend, Lehman would return about $261 million to shareholders.
Lehman shares rose $1.98, or 1.5 per cent, to $135.35 in morning trade on the New York Stock Exchange.