SEC Outlaws Dilution in the Dark

December 20, 2001 ( - The Securities and Exchange Commission (SEC) voted to require corporations to show the number of outstanding stock options, warrants and rights, and the number of securities available for future option awards, in their annual reports and proxy statements, beginning in July next year.

Proponents argue that additional disclosure is necessary to keep abreast of the growing issuance of stock options to employees – a practice which often dilutes the value of company stock.

But many corporations oppose subtracting the cost of options when granted, because their value is unknown until the options are exercised.

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