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That's an illusion. They book the expense at the cost of the share on grant date, so it looks good on the P&L, but they have to purchase the share at the price on the exercise date, so it's a significant drain on free cash flow.

Given that the thesis of the original post is that companies are swimming in money due to high stock prices; significant drains on free cash flows probably aren't the cause.

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Absolutely not.

For RSUs companies do not purchase at exercise date, they issue new shares (or use previous buybacks).

And for stock options, the employee pays the strike, so it's even a positive cash flow.

In the past Facebook bought back enough shares to cover RSU's. Their AI spend has changed this.

This is only sorta true, the total dilution from SBC is very small for most tech companies with some outliers (cough snap cough).

They may not purchase on exactly the vesting date but they certainly do offset the issued shares with buybacks. I think they can choose to reduce those buybacks without as much rigamarole as they'd need to issue new shares for funding, so they can effectively used that as a "back door" way to raise money. I think it might juice their P&L a little too, but I doubt that's why they do it.

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