# Kevin Koharki, PhD: What Stock-Based Compensation Really Costs -- The Billions That Never Show Up on the Books

Page: https://stenobird.com/podcast/talking-billions-with-bogumil-baranowski-5857987/kevin-koharki-phd-what-stock-based-compensation-really-costs-the-billions-that-never-show-up-on-the-books
Text version: https://stenobird.com/podcast/talking-billions-with-bogumil-baranowski-5857987/kevin-koharki-phd-what-stock-based-compensation-really-costs-the-billions-that-never-show-up-on-the-books.md
Podcast: [Talking Billions with Bogumil Baranowski](https://stenobird.com/podcast/talking-billions-with-bogumil-baranowski-5857987)
Published: 2026-04-06T04:12:00+00:00
Episode link: https://podcasters.spotify.com/pod/show/talking-billions/episodes/Kevin-Koharki--PhD-What-Stock-Based-Compensation-Really-Costs----The-Billions-That-Never-Show-Up-on-the-Books-e3hfqpd
Audio file: https://anchor.fm/s/bc3d43f4/podcast/play/118008045/https%3A%2F%2Fd3ctxlq1ktw2nl.cloudfront.net%2Fstaging%2F2026-3-6%2F421481058-44100-2-e5edafe575401.mp3
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Duration seconds: 4446

## Resource

Kevin Koharki, MBA, PhD, is the founder of CAE Consulting (Capital Allocation Enhancement), associate professor of accounting at Purdue University, and expert financial analyst with a 20-year career — including M&A analysis — who consults with and advises Fortune 100 companies on understanding the true economic cost of stock-based compensation. The episode is sponsored by TenzingMEMO — the AI-powered market intelligence platform I use daily for smarter company analysis. Code BILLIONS gets you an extended trial + 10% off. https://www.tenzingmemo.com/ 3:00 — Kevin traces the origins of stock-based comp to the 1990s dot-com era; originally meant to conserve cash at startups and align employee incentives with shareholders. 5:00 — The shift from stock options to RSUs and PSUs; accounting still at the expensing stage from 2002 FASB rules. 7:00 — Why stock-based comp is concentrated in the tech sector, particularly Mag-7 companies — the very firms that don’t need to conserve cash. 10:00 — Kevin walks through the mechanics: 100 RSUs granted at $30, expensed over three years, but if sold at $90, the $60 gap never appears on the P&L. 14:00 — Cash flow distortion: compensation paid in shares shows up as a financing activity, not an operating expense — inflating free cash flow. 17:00 — Why employees don’t truly become owners: tax liabilities force selling, and short-term vesting creates a “what’s my vest date?” mentality. 19:00 — The Berkshire model: Greg Abel buys shares with after-tax salary. No stock-based comp. Buffett’s emphasis on intrinsic value per share . 23:00 — Psychological toll: employees hired at the peak face crushing drawdowns; companies respond by issuing even more shares. 28:00 — Real-world example: a company with $102B in operating cash flow shows $6.4B…

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