Elizabeth Jacobs: Price-Earnings Ratios and Employee Stock Option Grants  - CLEO Skip to main content


An analyst questions the value of accounting measurement of earnings per share and stock option costs for equity valuation purposes. Besides being reluctant to make a sales recommendation to her clients based solely on an historical price-earnings ratio ‘story,’ Elizabeth had a number of concerns related to the heavy use of employee stock options as incentives and employee compensation in the high-technology sector.

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