Stock Based Compensation, Dilution, And Buybacks

In many modern companies, Stock Based Compensation (SBC) takes a bite out of earnings reported on the Income Statement. But since SBC is added back to earnings on the Cash Flow Statement, it has less of an effect on operating cash flow and free cash flow. Also complicating the issue are the different *kinds* of SBC and the rules to account for each: RSUs, options, performance related stock awards, vesting schedules, etc. And to top it off, many companies spend a lot of cash each year to buy back and retire their own shares — while at the same time issuing fresh shares to executives as SBC. So, to what extent is SBC a “real” cost to investors? How should we think about modeling SBC and predicting its impact on our long term returns? How do we examine the relationship between buybacks and SBC? In this episode, we’ll explore some of these questions. DISCLAIMER: None of this is investment advice. Download the Callin app for iOS and Android to listen to this podcast live, call in, and more! Also available at callin.com