Does Management Use Stock Options Excessively? Even if they’re distributed beyond the executive suite, giving out too many options dilutes existing shareholders’ equity. If a company gives out more than 1 or 2 percent of the outstanding shares each year, they’re giving away too much of the firm’s equity every year. Conversely, it’s a great sign if the firm issues restricted stock instead of options. Restricted stock has to be counted as an expense on the income statement (options don’t, as of this writing), and restricted stock also forces the recipient to participate on the downside if the
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