myStockOptions.com Glossary (2024)

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Burn Rate

Slang term denoting the percentage of stock options and other equity awards a company grants per year divided by the total number of outstanding shares. (An alternative measure divides it by the total number of shares authorized by the stock plan.) A burn rate measures how quickly a company's stock grants will dilute its outstanding common stock. For this calculation, the shareholder advisory firm ISS applies a multiplier adjustment for restricted stock and RSU grants. The burn rate a factor that a company considers in its grant guidelines. The expression run rate is a synonym.

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myStockOptions.com Glossary (2024)
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