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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (68967)	10/12/1999 8:53:00 AM
From: Freedom Fighter	Respond to of 132070

Don, >>I believe that currently some out of the money options are not counted in diluted shares, but I'm not sure.<< I'm not sure either but I think only "vested" options are included in diluted shares. I liked the quiz. It made me think. Wayne

To: Don Lloyd who wrote (68967)	10/12/1999 9:06:00 AM
From: Freedom Fighter	Read Replies (1) \| Respond to of 132070

Don, The one small problem I have with just looking at it from a dilution point of view is that it has a tendency to make an investor underestimate the impact of an ongoing option plan. (at least me) Here's an example. Assume a company can grow its net income by 5% per year. Assume it increases shares 5% per year via grants. This process is not causing EPS to decline. Instead it is preventing EPS from rising. However, the difference should have an enormous impact on the valuation. (growth in EPS vs. no growth) So those grants are extremely valuable and costing existing shareholders a not so obvious arm and a leg in wealth. Wayne