Instacart Shows Up Uber on Handling Stock Comp

Good things come to those who wait—including, we now know, Uber shareholders. The ride-hailing firm’s decision to launch a $7 billion stock buyback program sent the already rallying stock up another 15% to around $79.15. Since the stock was trading as low as $40 last October, Uber CEO Dara Khosrowshahi should be pleased. But taking the glass half-empty perspective for a moment, it doesn’t seem ideal that Uber is now positioned to buy back shares at close to $80 apiece, after several years in which the stock was stuck in the $25 to $45 range. Usually the idea is to buy the stock when it’s cheap.

Then again, this doesn’t seem to be one of those situations in which a company says its stock is so undervalued it has to buy it. At least part of the motivation for the buyback, Uber said, is to offset the (considerable) dilution of its growing share count, caused in no small part by handing out stock to employees as part of their compensation. That points up the true cost of stock compensation and the mistake companies—and investors—make when they ignore that expense in financial reports. Perhaps Uber should take a leaf out of Instacart’s playbook. The grocery-delivery firm last year offered employees a choice of taking more cash and less equity in their compensation, as Chief Financial Officer Nick Giovanni noted on Tuesday.