As sibling points out, this is reported in the financials of the company so shareholders are informed.

The reasons companies (listed and otherwise) give stock rather than cash are: 1)cashflow - it allows them to compensate people without affecting the cash position of the business 2)tax - sometimes it's more tax-efficient for the company than cash compensation 3)incentivises retention - vesting keeps people on the treadmill, especially if you re-up people while they vest so they would always leave a lot on the table if they walk. This is standard practise at Wall St firms so it's not SV-specific. 4)incentivises long-term value creation - if people get granted at around the fair value of the company when they join, then when they (exercise and) sell, they receive a share in the value they helped to create. It very much more direct than other forms of compensation 5)flexible - it's very difficult in many cases to adjust people's cash comp downwards. On the other hand if you structure a big piece of their annual comp as a discretionary equity bonus you can flex that 6)clawback - unvested equity is easy to claw back in the case of employee malfeasance. Cash is pretty much impossible to get back short of a lawsuit and even then, good luck.

I totally get that people's long-term financial well-being is often too correlated to their employer's stock price, but it's really no mystery why firms do this. It's not at all an SV invention either, it's very similar to the template used for a long time by Wall St firms.

Yes I know this is not just a SV thing, but it is still a con. About the only rational reason for granting stock in a company the size of Google is for tax reasons, but there is not even a good case here. If you want to tie compensation to long term performance then do this, don't just grant stock that can be sold straight away.

The reason it is used by lots of companies is it is a very effective way of stealing the shareholders money without them squawking.

Stock based compensation is reported as an expense in income statements, so, you're wrong.

This is why I said ignorant shareholders.

To "ignorant" shareholders, there's no difference between stock and cash compensation.

In the long run this is true, but in the short run ignorant shareholders overlook the dilution and just focus on the reported cash profit.

I do say I find it interesting that people even think that if you are going to be paid $x in total compensation it is better to be paid $x-y cash and $y in stock. I guess this sort of magical thinking is why companies do it.

That's what I'm saying, the "reported cash profit" includes stock-based compensation as an expense exactly like regular salaries. You don't even have to know what dilution means.

As opposed to the use of multiple share classes with different voting rights?

Well yes another con of the shareholders. Why shareholders invest in companies doing this sort of stuff is beyond me. It is not as though they are they actual owners of the business or anything.

I agree with you there (one reason I sell all my goog)

No its part of the employees comp - you seem to have a very 19th century Dickensian view of employees.

Not at all. I just think the employees should be paid in cash and not in shares as a way to hide the total compensation cost.

Ah so we should just tug our caps and be good little peasants and get above ourselves and say "thankee kindly master Frodo after saving the world ill just get right back to cutting the grass at bag end"

If you work at Google and you are paid in cash you can buy as much or as little of Google stock as you want. There is no rational reason (other than to fool ignorant shareholders) to pay part of your total compensation in company stock.

Tax efficacy and a much better gearing also owning shares in your employer is a good thing both for the company and socially.