Ann: Share Purchase Plan, page-6

The average I.Q. of a Board is higher than the average I.Q. of the investors they represent. That's the short answer.
The long answer? (1) A moderately raised dividend is no skin off the Company's nose compared to keeping everbody happy.
(2) The bigger the Company, generally the more power and remuneration afforded to members of the Board. A share purchase plan assists in this regard. Chalk up one for the Board.
(3) A SPP issued at above the intrinsic per-share value of the Company increases the underlying value of the shares of those who don't participate, and of the company as a whole. Chalk up another one for the Board.
(4) At the same time, by paying above intrinsic value, it reduces the underlying value of the parcel of shares allocated to those taking up the plan. But those participants don't feel the pain, as the discount to the prevailing share price merely acts a 'salve' to the majority who probably don't (or won't be able to) take advantage of such arbitrage. Basically, it's a fool's bargain in the aggregate, and you see it happen time and time again with overpriced DRPs and overpriced rights issues.