Stock Compensation Expense is an accounting term used to describe the cost associated with distributing equity awards to employees, directors, and other stakeholders. In short, it’s the total cost of awarding stocks or options to individuals or entities in exchange for services rendered. It is important to track this expense as it affects a company’s financial statement. A comprehensive understanding of this concept allows businesses to properly account for the costs associated with rewarding employees, thereby providing crucial insight into a business’ overall financial health.