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?
Oh and what about converts? i'm sure it depends on the converts themselves but are they generally the same in how i should dilute them? They seem a bit less straightforward than standard options.
ba-bump
You're trying to hard. The day that someone questions my diluted share count is the day Bear Sterns comes back from the dead and leads the league tables.
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