If Worthless Corp had 100 shares outstanding before this employee, the expense was half the company - whatever the valuation ends up being.
This is not the same as "nothing", and accounting should at least attempt to reflect that - such as by placing an estimated market value on the shares.
Regardless, this is a silly, contrived example. No public company is minting anywhere close to 100% of their total share count every quarter in SBC. It'll be a fraction of a percent, probably? And investors shouldn't care, as long as the company is performing well at metrics that actually matter: acquiring paying customers, where the cost of that acquisition is less than the new customers spend. That, and things like efficiency improvements that cut costs, are the only things that actually matter, because those things are what drive stock prices up.
I absolutely agree with you. I just don't agree with the conclusion this article reached: that stock-based compensation must be accounted for as an expense that affects income because, in the case where shares are issued via dilution, it doesn't affect income.
Is there a better way to present this to owners than GAAP vs. non-GAAP? I think so. Have I given it much thought? Not really. I just don't agree with including dilution as an expense that makes companies appear as if they're losing money hand-over-fist.
I'm open to being convinced otherwise, but this article didn't do it for me.
> This is not the same as "nothing"
Well, in the example, the valuation ended up being "nothing", and it seems fair to say that half of nothing is indeed the same as nothing. The owner in that scenario can retake 100% equity by paying nothing for the outstanding shares.