Eli, I was following Corp_Buyer's lead with the $10B market cap assumption - comparing apples to apples, as it were.
But there is another, very significant, point that you are missing:
If the share price does not increase at all, there will be no options exercised, no dilution, and the discussion will be moot.
So, we must assume share price appreciation in this debate. In fact, those of you who fear dilution would prefer to use higher prices in your examples because dilution increases with the price.