Under its executive stock option plan, National Corporation granted 12 million options on January 1, 2024, 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, 2026 (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. Suppose that unexpected turnover during 2025 caused the forfeiture of 5% of the stock options. Compute the amount of compensation expense for 2025 and 2026. Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Compensation expense (5 in millions) 2025 2026

Under its executive stock option plan, National Corporation granted 12 million options on January 1, 2024, 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, 2026 (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. Suppose that unexpected turnover during 2025 caused the forfeiture of 5% of the stock options. Compute the amount of compensation expense for 2025 and 2026. Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Compensation expense (5 in millions) 2025 2026

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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