Also not to nitpick but CSU and GOOG can't be compared in the non issuing equity even though not a direct comparison as you did say "To our knowledge, GOOG has not issued shares other than for acquisitions, which is not quite the same" as GOOGLE has issued insane amounts of shares via SBC and of course they buyback to keep share count BUT Is there not a better way? BEN HUNT says it well I think:
"When stock buybacks are used to sterilize stock-based comp (i.e., a company gives managers stock with one hand and buys it back from them with the other hand), no money is “returned to shareholders”. This is true whether or not management actually sells its shares into the buyback program.
Stock buybacks only “return cash to shareholders” to the degree that the buyback program reduces the share count. To the degree the buyback program does not reduce the share count, but simply sterilizes new issuance to management, it is purely a transfer of wealth from shareholders to management."
Thoughts or rebuttal to that?
For readers on Constellation:
Mark Leonard was funded with 25 million from OMERS in 1995 to start, they had one private placement in 2000 that Leonard regrets for 60 million (TD Capital – Birch Hill and OMERS), then going public in 2006 no shares were issued just provided exit for OMERS/Birch Hill.
The best things about them among never issuing new shares for acquisitions etc is they have no Stock Based Compensation or RSU/ESO and that combo is not replicated anywhere (plus executives and employees having to buy stock with parts of their bonus and hold for 4 years is great alignment).
This along with numerous other factors are why its my highest holding and you never worry about it, ever, 10 years reading your answers and your views have never changed on this company, you have always been a big bull and wish I didn’t wait until 2022 to buy or really understand the company!
We are not sure what to comment on for stock-based compensation (SBC). From an accounting perspective, it has been in place since 2006. We think it is necessary, as there is a cost to issuing shares and it should be recognized. But when a stock is rising and a company is growing fast, costs increase and more share options are needed to entice employees to join. Focusing too much on SBC in analysis, then, can punish companies that are growing fast and whose shares are rising. We do not think that is entirely fair. Would we prefer companies with low SBC? Certainly. Would we prefer true buybacks instead of just cancelling SBC shares? Again, yes. Many companies have what investors might perceive as 'excessive' SBC. But, in lots of cases this hasn't stopped their share price from going much higher. With nearly 20 years now of SBC accounting rules in place, it is just something we need to live with. Not to be ignored, of course, but monitored in the context of peers, the company itself, and investors' sentiment towards it.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in GOOG.