Outstanding Shares include both shares owned by the public and executives (Bishop). When an executive sells his shares it does not increase the number of outstanding shares, since they are already included in the total number of outstanding shares. Only shares sold from the company's treasury to pay Obligations incurred by the company (not Bishop) or exercised stock options and warrants (the right to purchase, not sale stock) can increase the number of outstanding shares.
"Outstanding Shares" definition by investopedia.com
Not to be confused with authorized shares, outstanding shares refer to the number of stocks that a company actually has issued. This number represents all the shares that can be bought and sold by the public, as well as all the restricted shares that require special permission from SEC before being transacted. As we already explained, shares that can be freely bought and sold by public investors are called the float. This value changes depending on whether the company wishes to repurchase shares from the market or sell out more of its authorized shares from within its treasury.
Let's look back at our company XYZ. We know that this company has 1,000 authorized shares. If it offered 300 shares in an IPO, gave 150 to the executives (Restricted shares) and retained 550 in the treasury, then the number of shares outstanding would be 450 shares (300 float shares + 150 restricted shares). If after a couple of years XYZ was doing extremely well and wanted to buy back 100 shares from the market, the number of outstanding shares would fall to 350, the number of treasury shares would increase to 650 and the float would fall to 200 shares since the buyback was done through the market (300 – 100).
The number of outstanding shares can fluctuate in other ways as well. In addition to the stocks they issue to investors and executives at the time of the initial IPO offering, many companies offer stock options and warrants. These are instruments that give the holder a right to purchase more stock from the company's treasury. Every time one of these instruments is activated, the float and shares outstanding increase while the number of treasury stocks decreases. For example, suppose XYZ issues 100 warrants. If all these warrants are activated then XYZ will have to sell 100 shares from its treasury to the warrant holders. Thus, by following the most recent example, where the number of outstanding shares is 350 and treasury shares total 650, exercising all the warrants would change the numbers to 450 and 550, respectively, and the float would increase to 300.
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