Electric Boat's parent company has done it while Rhode Island and Connecticut spent millions training company's workers.

"I think, as taxpayers, we're being taken for fools," said William Lazonick, an economist at UMass Lowell and an expert on stock buybacks. "At a minimum, I would have a rule saying, 'You're not getting any subsidies if you're doing buybacks. You're showing us you don't need the money.' "

Faced with the prospect of hiring thousands of workers to meet the surging demand for nuclear submarines, Navy contractor Electric Boat has turned to Rhode Island and Connecticut over the last two years to help defray by millions of dollars the cost of worker training.

The investment has been worthwhile, company president Jeffrey Geiger has said, because Electric Boat was "challenged to hire the [skilled] workers it needs."

But, when EB's parent company, General Dynamics, stood to boost its stock price on the open market, the company decided it could afford to open its corporate wallet for mass repurchases of its own shares — to the tune of nearly $10.3 billion since 2013, or 86 percent of company profits.

"I think, as taxpayers, we're being taken for fools," said William Lazonick, an economist at UMass Lowell and an expert on stock buybacks. "At a minimum, I would have a rule saying, 'You're not getting any subsidies if you're doing buybacks. You're showing us you don't need the money.'"

Lucy Ryan, General Dynamics' director of communications, said by email that she would not comment for this story.

Stock repurchasing — a technique common among the nation's top defense firms and used by Raytheon and Textron, contractors with major presences in Rhode Island — is when a publicly traded company buys back its own stock on the open market.

Some argue it can reward shareholders by supporting a stock's price, is useful to executives who think their companies are undervalued, and is sometimes an effective way to consolidate decision-making power.

But, especially because firms do not need to announce the specific date and time of a buyback, critics say the tactic is really a legalized form of stock manipulation that artificially inflates share prices and, by extension, executive compensation.

The use of buybacks was rare for decades, but became commonplace following a U.S. Securities and Exchange Commission rule change in 1982 that effectively allowed firms to repurchase shares in massive quantities without fear of prosecution.

The tactic has come under increased scrutiny in recent years from academics and some members of Congress.

Buybacks are bad for workers and average shareholders, Lazonick argues, because the real beneficiaries are savvy traders who can time their sales and corporate brass with pay packages linked to stock performance and earnings per share.

Share repurchasing, Lazonick says, is a major contributor to income inequality, because it siphons away corporate cash from employee salaries and pensions and undermines job security.

"Executives have become addicted to these things," Lazonick said by phone. "People should be up in arms about it. [They] just don't know how companies operate."

The issue went largely unnoticed until 2014, when Lazonick published an influential article in the Harvard Business Review, catching the attention of other academics, business journalists and some politicians.

His work led to action by Wisconsin Sen. Tammy Baldwin, who in 2015 sent two letters to Mary Jo White, then chair of the Securities and Exchange Commission. Baldwin called on the agency to more closely examine its rules governing share repurchases.

"A growing body of research," Baldwin wrote in one letter, "suggests that the vast amounts U.S. corporations have spent to repurchase their own stock is a chief cause of the stagnation of American wages and investment, and could be a potential source of long-term national decline."

In response, White said the SEC "works to identify and investigate misconduct connected to stock buybacks" and has taken enforcement actions against violators. White said she also directed staff members to seek feedback from businesses and investors about the need for more frequent and detailed buyback disclosures.

Some critics have said buybacks made by defense firms raise additional concerns because they consume funds that could be invested in research and development that makes Americans safer.

Sen. Jack Reed, the leading Democrat on the Senate Armed Services Committee and a member of the Banking, Housing, and Urban Affairs Committee, which oversees the SEC, would not agree to be interviewed for this story despite repeated requests placed to his office over a one-month period.

Rep. Jim Langevin, who represents the state's 2nd Congressional District and sits on the House Armed Services and Homeland Security committees, would not comment on share buybacks in the defense industry, Rhode Island Chief of Staff Seth Klaiman said via email, because it’s "not really a topic he knows about."

From 2005 through the first half of 2017, the top five defense contractors — Boeing, Lockheed Martin, Northrop Grumman, Raytheon, and General Dynamics — spent more than $114 billion on share repurchases, company filings show.

The largest spender was Boeing, which dedicated nearly $38 billion to buybacks. The company was followed by Lockheed Martin at $26 billion, Northrop Grumman at $21 billion, General Dynamics at $16.2 billion and Raytheon at $13.5 billion.

(Lazonick and other researchers at UMass Lowell compiled figures for this article from database and SEC sources at a reporter's request.)

Defense-industry analysts say buybacks became more common earlier this decade as companies responded to negative business effects, including drawdowns in the Iraq and Afghanistan wars, decreased defense spending and a perception of fewer national-security threats during the early years of the Obama presidency.

Jay Korman, managing director at the defense consulting firm Avascent, said firms have used buybacks "as a lever to boost earnings per share."

"The [question] is, can they continue?" he said. "I'd argue the era is kind of coming to a close."

Korman said rising geopolitical tensions, support for increased Pentagon spending in Congress, and a "deal-making president" who may be open to acquisitions in the sector will bode well for the industry, making companies less inclined to lean on share repurchasing.

"The world is a more uncertain place than five or 10 years ago," he said.

But so far, buybacks have not slowed down significantly.

In the case of General Dynamics, share repurchases began to accelerate under the leadership of CEO Phebe N. Novakovic, who became company head in 2013.

From 2009 through 2012, General Dynamics, the largest private defense employer in Rhode Island, spent $3.5 billion on buybacks. By comparison, from 2013 through 2016, the company’s buybacks were $9.4 billion, with another $901 million in the first half of this year.

Massachusetts-based defense firm Raytheon, which operates a campus in Portsmouth, has spent more than $4.6 billion on buybacks since 2013. Providence-based Textron spent more than $1.1 billion over that same period.

As a smaller company, Korman said, Textron is under more pressure to spend on product innovation than its larger competitors. Money dedicated to research and development at Textron has exceeded share repurchases every year since 2009.

In contrast, from 1996 through 2008, Textron spent $5.8 billion on buybacks, far more than the $3.8 billion spent on R&D.

The company spent no money on buybacks in 2009, 2010, 2011, and 2013. However, its buybacks of $329 million in the first six months of 2017 have already exceeded annual totals for 2015 and 2016.

Dave Sylvestre, executive director for corporate communications at Textron, said via email the company is "not interested in commenting on this topic at this time," suggesting it could send "market signals regarding Textron strategy."

Raytheon did not respond to multiple requests for comment.

Lazonick, who has published research rebutting the rationale that buybacks benefit average shareholders, contends that CEO and executive compensation packages tied to stock performance and earnings per share are the main drivers of the persistently high and widespread use of share repurchases.

Novakovic netted $49 million in take-home pay in her first four years as General Dynamics CEO, with an annual average of 43 percent of her total compensation coming by way of stock-based pay.

Her predecessor, Jay L. Johnson, received no more than 3 percent of his take-home pay through stock in his first three years as CEO. In his fourth and final year, 84 percent of his $34.5 million in pay came by way of stock-based pay, bringing his total compensation as CEO to $49.2 million.

According to the Rhode Island Department of Labor and Training, the average new hire at Electric Boat being trained with government funding last summer started at a $35,600-a-year salary, 441 times less than the $15.7 million Novakovic took home in 2016.

Since 1997, General Dynamics and its subsidiaries have capitalized on at least $316 million in state subsidies nationwide, including grants, loans, and tax incentives, according to Good Jobs First, a Washington, D.C.-based policy resource center that maintains an inexhaustive subsidy database on major corporations.

Subsidies to General Dynamics include a $194-million "megadeal" from the state of Maine to subsidiary Bath Iron Works, more than $42 million in tax benefits and grant and loan money from Connecticut, more than $17 million in tax credits and incentives from Rhode Island and nearly $21 million in tax benefits from Kentucky.

Governor Gina Raimondo would not agree to be interviewed for this story, but her spokesman, David Ortiz, said questions regarding defense-industry investments are matters "Congress and the Pentagon have the authority to take a look [at]."

"The state isn’t procuring from the defense industry," Ortiz said via email, "we’re training its workforce."

While General Dynamics would not comment on the company's use of buybacks, its 2016 annual report does give one explanation of why it was able to surpass a company record for earnings per share last year: "prudent deployment of capital."

Alex Nunes is a Westerly-based freelance writer and an adjunct journalism professor at Rhode Island College and other colleges. He last wrote about defense matters for The Journal in a September series, "Betting big on EB."