ESOP Dilution Calculator

Measure the dilution an employee share option pool creates for existing shareholders.

About ESOP Dilution Calculator

A 12% pool measured post-issue requires issuing more than 12% of the existing share count, because the new shares enlarge the denominator. Getting this backwards understates the dilution every time. Investors specify the pool as a post-money percentage precisely because it pushes the dilution onto existing holders rather than sharing it.

Formula

ESOP Dilution

Shares issued = existing ÷ (1 − target pool %) − existing

target pool: Pool size measured against equity after issue, not before

Worked example

With the default values below, ESOP Dilution Calculator returns New Shares Issued for the Pool of 1,363,636. Change any input above and every figure here is recalculated in your browser.

Inputs used

Shares outstanding before the poolminimum 1: 10,000,000
Target pool as share of post-issue equityaccepts 0–100 %: 12 %
Your ownership before the poolaccepts 0–100 %: 30 %

Results

New Shares Issued for the Pool: 1,363,636
Total Shares After: 11,363,636
Your Ownership After: 26.400%
Percentage Points Lost: 3.600%
Relative Dilution: 12.00%

Step by step

1Values used
2ESOP Dilution
3New Shares Issued for the Pool= 1,363,636
4Total Shares After= 11,363,636
5Your Ownership After= 26.400
6Percentage Points Lost= 3.600
7Relative Dilution= 12.00

Assumptions and limits

The result is derived only from the 3 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is ESOP Dilution calculated?

Shares issued = existing ÷ (1 − target pool %) − existing A 12% pool measured post-issue requires issuing more than 12% of the existing share count, because the new shares enlarge the denominator. Getting this backwards understates the dilution every time.

Why does ESOP Dilution matter?

Investors specify the pool as a post-money percentage precisely because it pushes the dilution onto existing holders rather than sharing it.

What values do I need to enter?

This calculator takes 3 inputs: Shares outstanding before the pool, Target pool as share of post-issue equity, Your ownership before the pool. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.