While smaller companies have highernumbers of options
outstanding than larger-market-cap companies, even the
larger-market-cap companies in the S&P 500 reported an
optionoverhangof16.4percent.Thepervasivenessofoptions
can also be seen in the number of companies that grant
options to management and in the number where options
outstandingrepresentaveryhighpercentoftheoutstanding
stock.In2003,forinstance,theIRRCreportedthatalmost 90
percentofthefirmsinitssamplehadsomeoptionoverhang
andthat 67 companies(about4.6percentofthesample)had
morethana 40 percentoverhang,upfrom3.6percentin 2002
and 3 percent in 2001.
Another measureof thereachof options isthenumber of
employeeswhoreceiveoptionsaspartofpaypackages.The
National Center for Employee Ownership estimated that
almost 3 million employees received options as part of
compensationin2000,upfromlessthanamillionin1990,
andthatabout 10 millionemployeesheldstockoptionsinthat