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Microsoft provides compensation to executives in the form of a variety of incentive compensation plans, including restricted stock award grants. The following is an excerpt

Microsoft provides compensation to executives in the form of a variety of incentive compensation plans, including restricted stock award grants. The following is an excerpt from a disclosure note from Microsofts 2015 annual report:

Real World Case 191

Restricted stock awards; Microsoft LO191

Real World Financials

Broaden Your Perspective

Shares ($ in millions)

Weighted Average GrantDate Fair Value

Stock awards: Nonvested balance, beginning of year 259 $ 27.88 Granted 75 42.36 Vested (94) 27.47 Forfeited

(24) 31.81 Nonvested balance, end of year 216 $32.72

Note 20 Employee Stock and Savings Plans (in part) Stock awards are grants that entitle the holder to shares of common stock as the award vests. Our stock awards generally vest over a five-year period . . . During fiscal year 2015, the following activity occurred under our plans:

Required:

1. What is the incentive provided by Microsofts restricted stock grants?

2. If all awards are granted, vested, and forfeited evenly throughout the year, what is the compensation expense in fiscal 2015 pertaining to the previous and current stock awards? Explain. Assume forfeited shares were granted evenly throughout the three previous years.

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