Stock-based compensation
In accounting, stock-based compensation means the cost of equity awards — options, RSUs, restricted stock — measured at grant-date fair value and recognized as expense over the service period. Non-cash, so added back in operating cash flow, but a real cost.
- Layer
- Lexicon
- Defined in
- Lexicon
- Also called
- SBC
- Nearby
- 4
Authority
This definition follows ASC 718-10.
Every citation in this system, with the text we read and the date we checked it, is in US GAAP and where these rules come from.
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
- Stock-based compensationOptions and stock granted to employees and contractors are an expense. Each award is measured at its fair value on the grant date and expensed over the period the person has to work to earn it.
- Burn rate and runway: how to calculate them correctlyGross burn, net burn and months of runway, done the way an investor checks them: from cash, averaged, and with the hires you’ve already committed to.
- Stock options, 409A valuations and vesting for startupsHow option strike prices are set by a 409A valuation, how vesting and the cliff work, and why ASC 718 makes every grant an expense on your P&L.
- How to read an income statement (P&L)Revenue, cost of revenue, gross margin, operating expenses and net income, read line by line, on accrual basis, with the mistakes founders make most.
What it is not called
Each of these is a real word for a different thing. Using it here is what makes a product read as though it was built by someone who has not done the work.
- free equity
- not a real expense
Nearby in the catalog
No component names this concept outright. These are the ones in its part of the system, which is a weaker claim — but a component nothing links to is a component nobody finds.
13Metrics & analysis
Family specTerms this one depends on
- ExpenseOutflows or other using up of assets, or incurrences of liabilities, from delivering or producing goods, rendering services or carrying out other activities — recognized when incurred, not when paid
- EquityThe residual interest in the assets that remains after deducting liabilities (FASB CON 8 ¶E61)
- PeriodA fiscal reporting window
Also in Equity & financing
Defined in Lexicon. This page is generated from that document, so the two cannot disagree.