EPS for ESPP: Simple Calculations to Help You Get it Right
With employee stock purchase plans (ESPPs) making a comeback, many companies are revisiting the need to account for the dilutive effect of ESPP shares. In this 2007 presentation, originally delivered at a meeting of the Silicon Valley chapter of the NASPP, Takis Makridis and Elizabeth Dodge explain the ins and outs of calculating earnings per share (EPS) for these cost effective, but often complicated, share-based programs. The discussion includes:
- An overview of EPS, potential common stock, sources of “proceeds,” and ESPP fair value
- The mechanics of computing incremental dilutive shares
- An end-to-end example of calculating EPS for a hypothetical ESPP
Get an in-depth look at this critical area of ESPP reporting.