In order to retain certain key executives, Smiley Corporation granted them incentive stock options on December 31, 2017. 150,000 options were granted at an option price of $35 per share. Market prices of the stock were as follows:

December 31, 2018 $46 per share

December 31, 2019 51 per share

December 31, 2020 50 per share

The options were granted as compensation for executives services to be rendered over a two-year period beginning January 1, 2018. The Black-Scholes option pricing model determines total compensation expense to be $1,500,000. What amount of compensation expense should Smiley recognize as a result of this plan for the year ended December 31, 2019 under the fair value method?

a. $2,625,000.

b. $1,650,000.

c. $1,500,000.

d. $ 750,000.