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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Don Lloyd who wrote (19227)5/22/2002 1:14:30 AM
From: Moominoid  Read Replies (2) of 74559
 
But if the company buys back the same number of shares as they issue for exercising options you won't see any dilution. But there is still a cost to shareholders which is seen in the equity account if the firm buys back shares high and issues cheap.

Now if my suggestion that the firm should have to buy back at the same time as granting the option was the case the cost to shareholders would be the opportunity cost of that cash which could have been used for other purposes. This will depress profits... Maybe this is like a worse solution than the problem it is solving, but that would be very transparent.

David
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