Financial Planning
What Percentage Does Your Equity Grant Represent?
Reproduce an equity grant percentage from a dated share count, then spot missing reserve, warrant and conversion assumptions.
What you will learn
- Calculate a grant’s percentage on a defined share basis.
- Separate authorized shares from modeled common-equivalent dilution.
- Detect a grant counted twice or an excluded instrument hidden from the explanation.
An equity grant’s percentage is its share quantity divided by a clearly defined company share count. The important work is choosing and documenting that denominator. The same grant can show different percentages without a single share changing hands.
Ask what the percentage measures
A company’s issued shares, outstanding options and future reserve are different buckets. Cooley’s fully diluted shares definition includes potential common shares from specified conversions and exercises, and notes that an unallocated equity-plan reserve may be included depending on context. Ask for the exact inclusion list and as-of date.
Do not automatically divide by every share the company is authorized to issue. Authorization provides capacity; it does not mean every authorized share is held by someone or included in the stated ownership model.
Build a fictional denominator bridge
Fictional inputs: a company has 8,000,000 issued shares on the stated common-equivalent basis, options covering 1,000,000 shares, an 800,000-share unallocated reserve and warrants covering 200,000 shares. The terms expressly use one-for-one common equivalents. There are no other convertible instruments in this illustration.
Defined fully diluted teaching case
| Bucket | Included shares | Check |
|---|---|---|
| Issued common-equivalent shares | 8,000,000 | Includes all issued classes on the assumed conversion basis |
| Granted option shares | 1,000,000 | Includes the candidate’s 40,000-share grant |
| Unallocated reserve | 800,000 | Not already granted |
| Warrant shares | 200,000 | Assumed one-for-one exercise |
| Defined total | 10,000,000 | Each bucket counted once |
The candidate’s grant covers 40,000 shares. On this defined basis, 40,000 ÷ 10,000,000 = 0.4%, or 40 basis points. Basis points are hundredths of a percentage point, so 40 basis points is not 40%.
Explain why another percentage appears
One numerator, two labeled views
| View | Calculation | Result |
|---|---|---|
| Grant relative to the current issued-share base | 40,000 ÷ 8,000,000 | 0.5% |
| Grant relative to the defined diluted base | 40,000 ÷ 10,000,000 | 0.4% |
The first view does not include the potential shares in this exercise. It is not evidence that the grant increased or that the company owes a fixed ownership percentage forever. An unexercised option also remains a right to purchase stock, not already-issued shares.
If a company also had an unresolved convertible instrument, this example’s denominator would no longer be complete. Record the missing instrument and ask for a reviewed model. Do not guess the conversion or quietly label the reduced total “fully diluted.”
Avoid the double-count trap
The candidate’s 40,000 options already sit inside the 1,000,000 granted-option bucket. Adding them again produces a false 10,040,000 total. Similarly, a reserve described as “total plan shares” may already contain granted awards; adding both without separating them inflates the denominator.
Use the company cap-table checklist for source reconciliation. Use the established priced-round dilution lesson only when modeling a financing, rather than treating this dated percentage as a forecast.
Copy the denominator receipt
As-of date and source version:
Grant quantity / instrument / unit:
Issued common-equivalent shares:
Granted awards included once:
Unallocated reserve, separately:
Warrants and conversion assumptions:
Other instruments included / excluded / unresolved:
Total denominator and calculation:
Who confirmed this basis and when:A useful confirmation reads: “40,000 option shares represent 0.4% of the stated 10 million-share diluted basis as of this snapshot, before future events.” It does not promise future value or permanent ownership.
Copyable AI prompt: Check the denominator
Try this with Aurora AI in Finta, Codex, or Claude. Use only material you are authorized to share.
Review an educational ownership-percentage worksheet. Inputs: [dated share buckets], [grant quantity and whether already included], [conversion assumptions], [explicit exclusions], [source labels]. Rebuild the denominator without double counting. Show the fraction, percentage and basis points. Mark missing instruments unknown rather than zero. Return a bucket table, arithmetic checks and questions for the company reviewer. Use only supplied authorized information. Do not appraise shares, interpret legal rights, recommend a grant, or change records. Draft for human review.Make the next conversation precise
Keep the approved calculation and open denominator questions with your fundraising materials in Finta Documents. Ask Aurora to help make the question concise; verify the share counts and governing definitions with the responsible company team before relying on the result.
Finta Field Guide. By Finta Editorial Team. Sources checked November 14, 2026. Examples are original, fictional teaching cases, not customer results or individualized legal, tax, accounting or investment advice.