Connors Company has 70 executives to whom it grants compensatory share options on January 1, 2019. The plan grants each executive options to acquire a maximum of 100 shares of the company’s $5 par common stock at $50 per share after completing 3 years of continuous service.
However, the number of options that vest depends on the increase in the company’s market share over the 3-year period. The following schedule shows the number of options granted to each executive based on the increase in market share by the end of the service period: 

Increase in Market Share.....................Number of Share Options Granted
0 to 4% ....................................................................................40
5 to 8% ....................................................................................60
More than 8% .......................................................................100
Based on past trends, on the grant date, Connors predicts that its market share will increase about 3% by the end of 2021. At the end of 2020, due to its improved market position over the previous 2 years, Connors revises this estimate to 7%. At the end of 2021, Connors determines that its market share has increased 9% over the 3-year period.
On the grant date, Connors estimates that (1) the fair value of each option is $16.25, and (2) its employee turnover rate will be 9% over the service period. At the end of 2020, because of increased resignations, Connors changes its estimated turnover rate to 12% for the service period. At the end of 2021, 59 executives vest in the plan. On January 17, 2022, 30 executives exercise their options when the stock is selling for $68 per share.

Required:
1. Prepare a schedule of Connors’s compensation computations for its compensatory share option plan for 2019 through 2021 (round all computations to the nearest dollar).
2. Prepare Connors’s memorandum entry on the date of grant and journal entries for 2019 through 2022 in regard to this plan.
3. Show how the account(s) related to the plan is (are) reported in the shareholders’ equity section of Connors’s balance sheet on December 31, 2020.
4. Next Level Do you see a problem with your answer to Requirement 3 and the eventual value of the vested share options? How might this problem be avoided?