FX Services granted 15 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $8 per share on the grant date. Ignoring taxes, what is the effect on earnings in the year after the shares are granted to executives?
A) $0.
B) $15 million.
C) $40 million.
D) $120 million.

Question

Quizplus · Accepted Answer

11ea937b_3594_673f_a419_0d7942192610_TB2599_00 The $120 million total compensation is expensed equally over the three-year vesting period, reducing earnings by $40 million each year.

FX Services Granted 15 Million of Its $1 Par Common