27 Todothis,wehavetomakeseparateforecastsofthestated
pretaxoperatingincomeandemployeeoptionexpenses,with
the latter defined as a percent of revenues each year.
28 G. T. Garvey, and T. T. Milbourn, “Do Stock Prices
Incorporate the Potential Dilution Effect of Employee
Options?,” working paper, SSRN, 2002.
29 F. Li and M. H. F. Wong, “Employee Stock Options,
EquityValuationandtheValuationofOptionGrantsUsinga
Warrant Pricing Model,” working paper, SSRN, 2004.
30 M.Semerdzhian,“TheEffectsofExpensingStockOptions
and a New Approach to the Valuation Problem,” working
paper, SSRN, 2004.
31 J. R. Graham, M. H. Lang, and D. A. Shackelford,
“Employee Stock Options, Corporate Taxes and Debt
Policy,”Journal of Finance159 (2004): 1585–1618.
32 GeorgeFennandNellieLiang,“CorporatePayoutPolicy
and Managerial Stock Incentives,” Journal of Financial
Economics 60 (2001),45–72.Similarconclusionsarearrived
at in Richard A. Lambert, William Lanen, and David F.
Larcker, “Executive Stock Option Plans and Corporate
Dividend Policy,” Journal of Financial and Quantitative
Analysis24, no. 4 (1989): 409–425.
33 K.M.Kahle,“When a BuybackIsn’ta Buyback: Open
MarketRepurchasesandEmployeeOptions,”workingpaper,
SSRN, 2004.