What is the general range of outstanding stock options to outstanding shares?

In general, the overhang ((options granted + options available)/total shares outstanding)) of a company will vary based on the industry in which it operates. Historically, overhang levels hovered at or near 10%. However, in some industries such as biotechnology, software, or other leveraged technology business, overhang could average closer to 20%. There is a bit of push/pull with overhang. Shareholders have a desire to keep the number low so they are not diluted when the options are exercised. Management will typically look for a higher overhang as equity is viewed as an attractive tool to attract, retain, and motivate their human capital.

by admin  |  Tuesday 4 November 2008 7:44am  |  Stock Options | Post a Comment  |  0 Comments

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