The compensation associated with executive stock option plans is
A)the book value of a share of the company's shares times the number of options
B)the estimated fair value of the options
C)allocated to expense over the number of years until expiration
D)recorded as compensation expense on the date of grant

Question

Quizplus · Accepted Answer

The compensation associated with executive stock option plans is the estimated fair value of the options. The fair value of the options is determined using complex models that take into account various factors like the stock price, exercise price, expected volatility, and expected life of the option. This fair value is then expensed over the vesting period of the options.

The Compensation Associated with Executive Stock Option Plans Is