Under Its Executive Stock Option Plan, Z Corporation Granted Options

question 140

Multiple Choice

Under its executive stock option plan, Z Corporation granted options on January 1, 2013, that permit executives to purchase 15 million of the company's $1 par common shares within the next eight years, but not before December 31, 2015 (the vesting date) . The exercise price is the market price of the shares on the date of grant, $18 per share. The fair value of the options, estimated by an appropriate option pricing model, is $4 per option. No forfeitures are anticipated. The options expired in 2019 without being exercised. By what amount will Z's shareholder's equity be increased?

• A)$60 million.
• B)$270 million.
• C)$315 million.
• D)$330 million.

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Definitions:

Employment

A formal relationship between an employer and an employee where the employee performs work or services in exchange for compensation.

Confidential Information

Sensitive data or knowledge not to be disclosed to unauthorized persons, often protected by legal or contractual agreement.

Lakeside Property

Real estate that is located adjacent to a lake, often valued for its scenic and recreational attributes.

Reimbursement

The act of compensating someone for an expense or loss incurred.