4 ms·

Don't forget that employee stock compensation also involves repurchasing shares off the market - which means some of the company's earnings do make it back to i

• btilly 13y ago
  Actually I will try to forget that, because it is wrong. Many companies have the ability to cover employee stock compensation by issuing more shares. This dilutes existing ownership rather than returning value to investors. If you want your eyes to glaze over, http://www.sec.gov/rules/final/33-8048.htm http://www.sec.gov/rules/final/33-8048.htm describes the SEC rules for how public companies need to tell their investors (who also generally own the company) what the risks are that their share of the company will diminish due to new stock being created for things like employee incentive plans. Of course if you're an investor, your eyes shouldn't glaze over. Because we're talking large sums of money. For instance for Google in Q1 of 2013, we're talking something like $697 million of value transferred from existing investors to employees. (Search for "SBC" in http://investor.google.com/earnings/2013/Q1_google_earnings.html http://investor.google.com/earnings/2013/Q1_google_earnings.... to see where I pulled that figure from. I won't guarantee that I read the filing correctly though.)