May 27, 2025 Executive Compensation Executive & Director Pay Design Articles

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Executive & Director Pay Design

How to Maximize Returns on Stock-Based Compensation Expense

As stock-based compensation faces increased scrutiny, boards can use this guidance to evolve their equity strategies to attract top talent while aligning with shareholder expectations.

The intense competition for talent, the evolution of talent strategies, and the growth of human capital investments have recently driven stock-based compensation expense (SBCE) higher, drawing increased scrutiny from investors and stakeholders.

This rise is partially due to a volatile labor and economic market during the past four to five years, but it also points to a growing focus on building a workforce of highly skilled employees. Unlike other capital investments, such as return on invested capital, return on assets, and return on equity, SBCE lacks a standardized method for measuring returns. Even so, accurately managing and monitoring talent investments is not impossible. By linking equity spending to growth and profitability, companies can power talent investments and demonstrate the value of SBCE programs to shareholders.


View the full article as it was originally published.

Michael Gorski

Chase Goldberg

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