“Stock-based compensation is the most egregious example,” Buffett said. “The very name says it all: ‘compensation.’ If compensation isn’t an expense, what is it? And, if real and recurring expenses don’t belong in the calculation of earnings, where in the world do they belong?”
Buffett has been arguing this point for as long as companies have been excluding this expense from their income statements.
“This Alice-in-Wonderland outcome occurs because existing accounting principles ignore the cost of stock options when earnings are being calculated, even though options are a huge and increasing expense at a great many corporations,” Buffett said in his 1998 letter to Berkshire Hathaway shareholders. “In effect, accounting principles offer management a choice: Pay employees in one form and count the cost, or pay them in another form and ignore the cost.”
https://finance.yahoo.com/news/warren-buffett-shines-a-spotlight-on-the--most-egregious--example-of-financial-deception-121857624.html#