Under its executive stock option plan, National Corporation granted options on January 1, 2011, that permit executives to purchase 12 million of the company's $1 par common shares within the next six years, but not before December 31, 2013 (the vesting date). The exercise price is the market price of the shares on the date of grant, $17 per share. The fair value of the options, estimated by an appropriate option pricing model, is $5 per option. No forfeitures are anticipated. Ignoring taxes, what is the total compensation cost pertaining to the stock options? What is the effect on earnings in the year after the options are granted to executives?
Answer to relevant QuestionsRefer to the situation described in BE 19-2. Suppose that unexpected turnover during 2012 caused the forfeiture of 5% of the stock options. Ignoring taxes, what is the effect on earnings in 2012? In 2013?Refer to the situation described in BE 19-6. Suppose that Farmer initially estimates that it is not probable the goal will be achieved, but then after one year, Farmer estimates that it is probable that divisional ...Allied Paper Products, Inc. offers a restricted stock award plan to its vice presidents. On January 1, 2011, the company granted 16 million of its $1 par common shares, subject to forfeiture if employment is terminated ...In order to encourage employee ownership of the company's $1 par common shares, Washington Distribution permits any of its employees to buy shares directly from the company through payroll deduction. There are no brokerage ...Stanley Department Stores reported net income of $720,000 for the year ended December 31, 2011.Additional Information:Common shares outstanding at Jan. 1, 2011 ............ 80,000Incentive stock options (vested in 2010) ...
Post your question