Overhang

A measure of the potential dilution to which a common stock's existing shareholders are exposed due to the potential that stock-based compensation will be awarded to executives, directors or key employees of the company. It is usually represented in percentage form and is calculated as stock options granted, plus the remaining options that have yet to be granted divided by the total shares outstanding.

There is no precise rule-of-thumb for determining what level of options overhang is bad for investors but, generally speaking, the higher the number, the greater the risk. If a company has a very high options overhang, it must generate even higher levels of growth in order to provide decent returns to investors net of the overhang's dilutive effects on investor returns.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Overhang — may refer to: Debt overhang, a fiscal situation of a government Market overhang, a concept in marketing Monetary overhang, a phenomenon where people have money holdings due to the lack of ability to spend them Overhang seat, a constituency seat… …   Wikipedia

  • Overhang — O ver*hang , n. (Arch.) 1. In a general sense, that which just out or projects; a projection; also, the measure of the projection; as, the overhang is five feet. [1913 Webster] 2. Specifically: The projection of an upper part (as a roof, an upper …   The Collaborative International Dictionary of English

  • Overhang — O ver*hang , v. t. [imp. & p. p. {Overhung}; p. pr. & vb. n. {Overhanging}.] 1. To impend or hang over. [R.] Beau. & Fl. [1913 Webster] 2. To hang over; to jut or project over. Pope. [1913 Webster] …   The Collaborative International Dictionary of English

  • Overhang — O ver*hang , v. i. To jut over. Milton. [1913 Webster] …   The Collaborative International Dictionary of English

  • overhang — index overlap, project (extend beyond) Burton s Legal Thesaurus. William C. Burton. 2006 …   Law dictionary

  • overhang — 1590s (v.), from OVER (Cf. over) + HANG (Cf. hang). The noun meaning fact of overhanging is attested from 1864 …   Etymology dictionary

  • overhang — *bulge, jut, stick out, protuberate, protrude, project, beetle Analogous words: *threaten, menace: suspend, *hang, dangle …   New Dictionary of Synonyms

  • overhang — [v] bulge, hang over beetle, be imminent, be suspended, cast a shadow, command, dangle over, droop over, endanger, extend, flap over, impend, jut, loom, menace, overtop, poke, portend, pouch, project, protrude, rise above, stand out, stick out,… …   New thesaurus

  • overhang — ► VERB (past and past part. overhung) ▪ jut out or hang over. ► NOUN ▪ an overhanging part …   English terms dictionary

  • overhang — [ō΄vər haŋ′; ] also, and for n.always [, ō′vər haŋ΄] vt. overhung, overhanging 1. to hang or project over or beyond 2. to loom over; threaten vi. to hang over; project or jut out over something n. 1. a) the pro …   English World dictionary

  • overhang — Used in the context of general equities. Sizable block of securities or commodities ( commodity) contracts that, if released on the market, would put downward pressure on prices ; prohibits buying activity that would otherwise translate into… …   Financial and business terms

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