Treasury stock

Treasury stock is stock that a company has repurchased from the market and continues to hold itself, rather than retiring it permanently or reselling it to new investors. It sits on the balance sheet as a contra-equity item, a negative entry that reduces total shareholders equity by the cost the company paid to buy those shares back.

Shares held as treasury stock are not entitled to vote and do not receive dividends, and they are excluded from the outstanding share count used to calculate earnings per share and other per-share metrics. This is one reason a large stock buyback program can boost earnings per share even without any change in the company's net income, since the shares moved into treasury reduce the denominator used in that calculation.

A company holding treasury stock has flexibility in what to do with it later. It can reissue those shares for purposes like funding employee stock compensation plans or as consideration in an acquisition, or it can formally retire them, permanently removing them from the company's issued share count rather than simply holding them in reserve. Either way, treasury stock represents capital the company has already spent buying back its own shares, sitting on the balance sheet until management decides what to do with it next.