THE BARATELLI INSTITUTE · Mentoring at Scale
SBC VALUATION SUITE · THE FRAMEWORK NOBODY ELSE OPERATIONALIZES

Stop conflating GAAP SBC expense with real economic dilution.

Every public-company analyst treats stock-based compensation as a single number that hits the income statement and dilutes the share count. That framing is wrong. Out-of-the-money options are phantom dilution — they generate GAAP expense but will likely never be exercised. RSUs and ITM options are real future dilution — they vest and convert to shares regardless of price. Buybacks offset — cash spent retiring shares reduces actual share count. This tool sorts your company's SBC into those three buckets and tells you what the real share-count change is.

Bucket sort
Phantom / Real / Offset
ITM vs OTM
Option moneyness flag
Net Δshares
After buyback
GAAP vs real
$ SBC vs share dilution
Try the worked example. Lyft FY2025: 0 options outstanding, 26.3M RSUs/PSUs, 30.3M shares bought back, $322M GAAP SBC expense. Result: net share count declined 12M — even with a third of a billion in SBC expense. Click to auto-fill.
STAGE 1 OF 4

Current stock price and options outstanding

From the most recent 10-K stock-compensation footnote: the weighted-average exercise price of options outstanding and the option count.

$
Recent close, or the price you want to evaluate moneyness against.
$
From the 10-K SBC footnote — the "weighted-average exercise price" of options outstanding.
Total option count from the 10-K rollforward. For mature companies this is often near zero (RSUs replaced options ~2015 onward).
STAGE 2 OF 4

RSUs and PSUs outstanding

RSUs (and PSUs at target) convert to shares regardless of stock price. They are real future dilution.

From the 10-K equity-award rollforward — unvested RSUs and PSUs combined. PSUs at target unless company discloses otherwise.
STAGE 3 OF 4

Recent buyback and GAAP SBC expense

Shares actually retired in the most recent fiscal year. From the cash flow statement "Repurchases of common stock" / weighted-average price.
Total stock-based compensation expense recognized for the year, from the cash flow statement.
STAGE 4 OF 4

Reality check — what your SBC actually dilutes

WANT THE METHODOLOGY BEHIND THIS TOOL?
Read more in the CFO Guide.
The tool gives you the answer. The guide gives you the argument — the case law, the worked examples, the negotiation playbook, the cross-check tables, the exception cases.
The methodology behind this calculator is in Ch 19 Stock-Based Compensation (Reality Check) of the reference guide.
Read more in the CFO Guide → Browse all 22 guides