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FAS 123 Is Coming: Do You Know Where Your EPS' Are Going?



Starting on June 15, and depending on a company's fiscal year thereafter, the insiders' gravy train of option grants will hit a major red light, as CFO's must begin to account for the sometime obscene pillaging of shareholders' value.

Everyone knows that many companies' EPS will shrivel like our studly bovine in Washington's snow, and many feel that the EPS shrinkage has already been factored into today's stock prices. Many, of course, thought that Aunt Fannie's (FNM) stock price already discounted a cut in the dividend, considering that such an occurrence had been all but announced about a month before it happened, and yet since the day FNM's dividend was actually cut the stock has lost a cool 15% or so.

Therefore, just in case the gifting of shareholders earnings to insiders has not been factored into the price equation, here are the companies with a market cap of at least $1 billion and whose stock compensation would have diluted EPS by at least 25% for each of the last four consecutive quarters. For reference sake, I have also included some EPS data to highlight that these companies are not going to have GAAP earnings for a long time unless they find "compensation religion" in a hurry.

For a spreadsheet detailing Options Dilution, please click here.

Editor's Note: Please click on "No" if prompted to update spreadsheet.

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