Stock-based compensation of 30 — how does it flow through the three statements?

SBC is an expense (typically in personnel or SG&A) — personnel expense +30, EBIT −30, taxes −9, net income −21. Cash flow statement: net income −21, but SBC is non-cash → add-back +30 in OCF → Δ OCF +9 (tax shield). Balance sheet: equity +30 (additional paid-in capital from share-based compensation) and retained earnings −21 → equity net +9. Cash +9. Assets +9, equity & liabilities +9 → balances.

Key point: SBC is non-cash but an economically real expense — you are handing out equity stakes. IB practice and buyside analysts almost always add SBC back out of 'adjusted EBITDA' (especially in tech: Microsoft, Salesforce). At large-cap tech names (SAP), SBC runs to roughly $1–2bn per year.