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Run Rate
A calculation that quantifies the potential annual shareholder dilution from equity grants. This percentage is based on the number of shares (whether options or actual stock) the company uses in equity grants each year as a percentage of total common stock outstanding. Surveys have found that the run rate ranges from 0.5% to 3% per year, varying by industry. As companies make smaller stock grants and reduce eligibility, this percentage is declining. Run rate is a synonym of the more informal expression burn rate.
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