Could you help me in understanding this? In my head if dividends are paid out, wouldn't this drive the stock price up the same as if a buyback happened? Or is this some sort of market inefficiency / irrationality where the market is rewarding stock purchase volume rather than just looking at the total expected value of the company?

Edit: sorry about that, I get it now after thinking through it more.

Let's say the stock is truly worth $100 (assuming we could figure that out). Then if the company does buybacks, the stock trades at $100 - great for the executive with stock options. However, if the company pays dividends, then the stock price is reduced by the expected value of those dividends. So total expected value is the same, and long term executive comp is the same because they get the dividends as well, but short term they would prefer the buyback because of the higher stock price. They only benefit the same from dividends if they have a long term view.