Elmer, actually two things were confused in that quote from Dew:
but share expansion obviously does affect shareholders’ equity per share (a.k.a. book value per share).
Equity per share is actually stock price (for a public company), by definition.
Book value per share is the liquidation value of assets, per share.
Equity per share definitely is different from book value per share! However, Dew meant to talk about book value, which is increased by profit (all other things being constant from year to year, an idealized thought experiment). His complaint is that the company earned money (per GAAP) yet each shareholder does not see increased value. The difference is due to dilution of stock through grants, in his example, because the company gave grants in such a way that the increase in book value was distributed to the employees. This left the outside investors with no added value for their risk, a bad situation for these imaginary shareholders but quite accurate accouting.
All the profit was given away to employees through grants. Management should be canned!
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