Dilution Concerns.

• Position: Stock options incentives - Brief Article - Statistical Data Included

Another survey, this one by the Investor Responsibility Research Center (IRRC), concluded that the dilution created by granting options has reached levels that are troubling to some shareholders. The IRRC reported that average potential dilution at Standard & Poor's 1500 companies reached 14.6 percent in 2000, up from 13.4 per cent the year before. The trend was even stronger at larger companies in the S&P 500, where potential dilution rose from 9.2 percent in 1995 to 11.4 percent in 1999 and 13.1 percent last year.

"The use of stock and option incentives has traditionally been viewed positively by investors because it ties compensation to company performance," says Carol M. Bowie, the IRRC's director of corporate governance services. "But every time you issue more stock, you dilute the voting power, as well as the earnings and assets per share, of the current shareholders. You slice the pie into thinner pieces, and that's bound to cause...