A companys board is deciding whether to grant the companys current CEO an option to buy one million shares of the companys stock at the price of $18 per share. The companys stock is currently trading at $20 per share. The option will expire in six years and the owner of the option can have the flexibility to exercise the option anytime up until (and including) the options expiration. This option is not transferrable. Assuming that the risk-free interest rate is 1.5% per annum.

If the annualized volatility of this companys stock price is 20% and the public expects the company to pay one dividend of $5 per share in 5 years time from now and another dividend of $3 per share 7 years from now. What is the current value of this option?

If the CEO is granted the option stated above today, does he have incentive to pay more or less dividend in the next 6 years?