X grants 100,000 options to employees having a fair value of $6/option, exercisable in 2 years year at $10. The options will vest only if X achieves a specified revenue target for the year. Half the employees quit before vesting. The revenue target is achieved. The stock price is $7 on the vesting date.

 a. What is the total compensation expense over the two years?

 b. Explain BRIEFLY.

Answer rating: 100% (QA)

a To calculate the total compensation expense over the two years we need to consider the number of options that vest and the fair value of those optio... View the full answer