Abstract Current recommendations of the American Institute of CPA include reporting the number of shares under option, the option price, the number of shares exercisable under options at the end of a period, and the number of shares and the prices paid for shares issued under options during the period of report. Among the proposed changes in stock option disclosure are a review of general provisions for plans in effect and a comprehensive tabulation of all stock option transactions during the period of report. An important addition to present reporting practices is disclosure of current market values of shares under option. Market value data are considered essential in order to clarify certain costs of stock option programs that are not apparent to many investors. Stock options have been subjected to criticism in the past. Opponents and advocates alike admit that some dilution of equity occurs when options are granted. The cost of dilution to shareholders depends upon future stock appreciation, an unknown factor at the time options are granted.
Linda H. Kistler (Sun,) studied this question.