Able Co. had compensation plans in effect for senior managers that included two long-term compensation elements. Retention levels were estimated to be \(80 \%\) at the end of \(20 \mathrm{X} 4\). SFP accounts at the end of \(20 \mathrm{X} 4\) :

Required:
1. Describe the likely features of the two kinds of compensation plans above. Provide the calculation to support the balances recorded.
2. Assume no new compensation entitlements were offered in \(20 X 5\). At year-end, the common share price was \(\$ 60\) and the fair value of a SARs unit was estimated to be worth \(\$ 9.25\). Retention is now assumed to be \(75 \%\). Give the entries to record compensation expense related to the above plans.

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Liability-SARs plan 40,000 units are under SARs agreement, where the reference market price is $52 per common share, one share per SARS unit; valuation models indicate a fair value of $8.75 per SARS unit; the SARS have been outstanding for one year and must be held for a total of four years before vesting. Contributed capital employee share options outstanding 35,000 shares are under option at an exercise price of $42. The options were valued using a binomial valuation model and determined to be worth $700,000. The options have been outstanding for three years and must be held for a total of five years before they can be exercised. $ 70,000 $336,000