IN YEAR 1, AN EXECUTIVE RECEIVES A STOCK OPTION PLAN. HE CAN PURCHASE 10,000 SHARES AT THE EXERCISE PRICE OF 25.00 PER SHARE WITHIN THE NEXT 5 YEARS. THE OPTIONS ARE NOT PERFORMANCE BASED. IN YEAR 3, THIS EXECUTIVE(WHOSE COMPENSATION OTHERWISE WAS 1,300,000, EXERCISE THE OPTION WHEN QUOTED PRICE IS 50.00 PER SHARE. HOW MUCH COMPENSATION IS NOT DEDUCTIBLE FOR THE COMPANY

250,000

300,000

550,000

1,000,000