JKC Initiated a Stock Option Plan for Its Three Top

question 23

Multiple Choice

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) $8,100
• B) $3,000
• C) $600
• D) $0
• E) Cannot be determined from the information provided.

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Definitions:

5-Membered Ring

A cyclic structure in organic chemistry consisting of five atoms, which can be of the same or different elements.

Amino Acid

An organic molecule that serves as the building block of proteins, containing both an amino group and a carboxyl group.

α-Carbon

Refers to the first carbon atom that attaches to a functional group in an organic molecule, playing a crucial role in the structure and reactivity of molecules.

Biological pH

The measure of acidity or alkalinity within living organisms or biological systems, crucial for maintaining homeostasis and enzymatic activities.