Treasury stock

A treasury stock or reacquired stock is stock which is also bought back by the issuing company, reducing the amount of outstanding stock on the open market ("open market" including insiders' holdings).

Stock repurchases are used as a tax efficient method to put cash into shareholders' hands, rather than paying dividends, in jurisdictions that treat capital gains more favorably. Sometimes, companies do it when they feel that their stock is undervalued on the open market. Other times, companies do it to reduce dilution from incentive compensation plans for employees. Another motive for stock repurchase is to protect the company against a takeover threat.