When the option pool is created that is the dilutive event, so new employees getting their grants doesn't result in current employees being diluted, because the entire pool was already taken into account.
When the option pool is created that is the dilutive event, so new employees getting their grants doesn't result in current employees being diluted, because the entire pool was already taken into account.
But that’s not true. An options pool containing shares owned by the company is the same from a “how much of the company do I own” perspective as unissued or even uncontemplated shares.
The only real advantage to the options pool is ease of management of the shares. There’s a lot of paperwork around issuing new shares you don’t want to do it every time you hire a programmer. And I guess you could argue that telling people the pool exists lets them not be surprised by the future dilution when they’re issued. But the pool itself hasn’t diluted anyone.
Dilution is created by increasing the number of shares held by the company’s owners. Actions like issuing shares from a pool (or the inverse, buyback or cancellation of grants) affect every shareholders relative dilution.