January 1, 2021, Penny Company granted Ken King, an employee, an option to buy 400 shares of Penny Co. stock for $30 per share, the option exercisable for 5 years from date of grant. Using a fair value option pricing model, total compensation expense is determined to be $5,400. King exercised his option on September 1, 2021, and sold his 400 shares on December 1, 2021. Quoted market prices of Penny Co. stock during 2021 were:

January 1 $30 per share

September 1 $36 per share

December 1 $40 per share

The service period is for two years beginning January 1, 2021. As a result of the option granted to King, using the fair value method, Penny should recognize compensation expense for 2021 on its books in the amount of: