Employee Stock Options - NQSOs & ISOs Message Board

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Strategies & Market Trends : Employee Stock Options - NQSOs & ISOs

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To: hueyone who wrote (46)	6/20/2002 5:57:08 PM
From: Biomaven	Read Replies (3) of 786

Please show me where a diluted EPS takes into account the differernce between strike price and market price, the cost? FAS 128, which governs reporting of diluted earnings, does precisely that, using what is known as the Treasury Stock Method. You basically buy back shares at the average price for the quarter using the proceeds of the assumed exercise (plus a tax benefit for NQ options). Net result is that the cheaper an option is the more dilution it causes. Options whose strike price is equal to the average stock price for the quarter are a wash - neither dilutive nor anti-dilutive. Peter

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