JKC initiated a stock option plan for its three top executives.The plan provided that each executive would receive 6,000 options that would enable each one to purchase 600 shares at the option price.The option price was set at 10 percent below market price at the first exercise date.The options could be exercised after the executives remained as employees of the company for 3 more years.The market price of the shares on the date that the options were granted was $10 per share.The amount of compensation expense the company incurred for the three executives due to the option plan was:
A)$0
B)$600
C)$8,100
D)$3,000
E)Cannot be determined from the information provided.

Question

Quizplus · Accepted Answer

The amount of compensation expense cannot be determined from the information provided because it does not specify the market price of the shares at the first exercise date, which is necessary to calculate the discount and thus the total compensation expense.

JKC Initiated a Stock Option Plan for Its Three Top