What are the two primary paths for share repurchases?

The two primary paths for share repurchases are retiring the stock or keeping them as treasury stock. When a company opts for share buybacks, it essentially buys its own shares back from the marketplace. The shares can take one of two primary forms: they can be retired permanently, reducing the total number of outstanding shares and potentially increasing the value of remaining shares, or they can be held as treasury stock, which allows the company the option to reissue those shares in the future if needed.

Retiring the stock reduces the overall share count and signals to the market that the company believes its shares are undervalued, often leading to a positive reaction from investors. Keeping shares as treasury stock provides flexibility, enabling the company to reissue the shares for purposes such as employee compensation plans or other financing needs without issuing new shares, which could dilute existing shareholders’ value.

Understanding these paths is crucial in financial modeling and capital management, as they indicate a company's strategy towards capital allocation and shareholder value enhancement. The other choices provided reflect different strategic decisions that are not directly related to the primary purposes of share repurchases.