Typically ESOPs being issued should increase total diluted shares outstanding. It doesn’t matter wrt there being skin in the game if it is at the cost of existing investors getting diluted. Companies that approach management with an ownership mindset usually buyback shares to offset any shares issued. Either way, I would argue a 0.5% increase is not much in the longer term as long as it is a one off thing.
Over the last couple of years, diluting shareholders to reward management and employees has been marketed as a move towards ‘ownership’ but we have seen cases like Lyft where the CEO was giving himself hundreds of millions every year in stock and like Musk with Tesla holding shareholders hostage for a billion dollar payout.
They should earn 71.6 lakh from this as they issued these for 2 rupees per share for eligible employees to buy, the money is usually reflected under cash on the balance sheet for most issuances.
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