either management are spending shareholders' wealth unnecessarily because they are cynical and it makes them look good in the short term while mostly hiding the true cost, or they are spending shareholders' wealth unnecessarily because they are not smart enough
...
I think there is a third possibility. It may make sense to make employees an ownership stake in their work, especially if the most Google is building is being built by these skilled workers.

Sure. There's always an agency problem to worry about, but the job of a boss to do the detailed capital allocation. Maybe the boss thinks this truly is the best use of that capital. Fair enough.

But if they feel that's the best allocation of capital, it should be plain old compensation expense at the true cost (market price at the moment it is free and clear in the employee's hands being the best available approximation), with no distortions or perverse incentives or tax dodging. The full true cost should hit every level of bookkeeping, from executive compensation down to the departmental budget. And the public financial statements, of course.

One side effect of my suggestion of having to buy the gifted securities on the open market is that the company has to have the cash to do so, and the share count is unaffected at the moment of that transaction. In some extreme circumstances, they might have to do a secondary offering to raise the necessary cash.

Jim