Companies all have the right to do with their profits as they please, and they all do. Some take a windfall and invest it back into their business, some spend it on advertising in hopes of a net gain return, some reward loyal employees, some do **** just to say “look at me”. We have seen all the above by companies looking to capitalize on their decisions.
If it were me I would rate them in the following order 1 - 3 - 2 and never 4.
#1 buying back stock is the number one conservative thing to do, it allows you to take back more control of the company, since you give up control when you sell stock. This also allows a company to have more financial flexibility when times are tougher.
#2 employees are the life blood of a good company, and keeping good employees and rewarding their efforts, in most cases is by and large a very sound business decision. Employees that feel appreciated and whom get a taste of the rewards put out better effort for the company.
#3 Advertising is strictly a numbers game, as long as you continue to get a return on those dollars, you continue to spend them.
#4 the “Hey look at me” expenditure normally pisses off more people in the long run. Too many end up thinking that if you have that much money to “waste”, maybe you don’t need any of mine. See Dick’s Sporting Goods as an example.