mb - (...Nevertheless, the idea that options have zero cost seems, at best, counterintuitive...)
I agree with counterintuitive, but that doesn't rule it out.
When a company is audited, the assets and liabilities are counted up for the company as a whole, and do not depend on either how many shares or how many shareholders are outstanding. When we look at EPS, my claim is that 'E' and 'S' should not be unnecessarily commingled. Real economic costs will affect 'E', and real share dilution should affect 'S'. Option grants will only affect 'S' (other than the positive effect of foregone salary), unless and until the shares are repurchased. But there is no reason to distinguish between the possible reasons for a given share repurchase, which must be justified on its own merits.
Regards, Don |
