Shareholder Value Transfer

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Shareholder Value Transfer

A measure of the amount of equity going out of a publicly-traded company when the company's executives exercise stock options. It is measured as the difference between the strike price of the stock options and the fair market value of the company's stock. When an executive receives a stock option, he/she has the right to buy shares in the company at a certain price, regardless of the company's market value. When these options are exercised, the company is deprived of the equity it otherwise would have received had those shares been sold to someone else.