Share Dilution

  • I often see K's show how they get from basic to diluted shares, and then immediately after list a table of outstanding options/RSUs, etc, that were "not included in the diluted share count shown above because they would be "anti-dilutive"? What does this mean, why do options/RSUs regularly get excluded from the disclosed dltd share count calc?
  • Do i need to treat Employee stock purchase plans (ESPPs) differently than regular outstanding options when calculating share dilution under treasury method?  I see in many co's K's ESPPs have authorization to issue quite a large amount of shares (or options?), and if i assume full dilution (bc no exercise price is usually provided with ESPPs, right?) than it can make a big difference to the final diluted shares calc. WHat is best practices here?
  • Do i treat RSUs the same was as options outstanding when doing the treasury method? Just use the "weighted avg exercise px" for the RSUs given in the K?
  • Warrants should generally be treated like options as well, right? I should read the conditions for exercise, but generally they are just long-dated options.

ANy other just general best-practices (like making sure i always do trsry method) that i should always do when modeling, that are maybe not obvious? ... things like excl operating lease liabilities when calculating entp value.... anything else?

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Comments (3)

  • VP in ER
Sep 17, 2021 - 3:56pm

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