It’s a Ponzi scheme that works as long as the stock price goes up, because if it goes down, employees will not accept stock based compensation as salary, which also means the company can no longer add this expense to its artificial cash flow.
An added expense to the shareholder is the dilution that these increasing stock-based compensations are causing. Every quarter, the share count is rising. So the shareholder is fooled in a double manner. By dilution and representing costs as profits.
(Curated by Dennis Moore. Read the complete article here)