On January 1, 2019, Alignment Corporation decided to issue their Senior Executive team Stock Appreciation Rights (SARs). In total, the Senior Executives would receive 500,000 SAR's with an exercise price of $ 40 per share. The exercise price was equal to the market price of Alignment Corporation common stock on January 1, 2019. In accordance with the terms of the grant, Executives had to remain an employee of Alignment Corporation for a total of four years in order to be able to exercise the SARs. Whenever an executive decided to exercise his/her SARs, the executive would be paid in cash. The SARs expired at the end of ten years, on December 31, 2018.

The stock price of Alignment Corporation common stock on December 31, 2019 was $ 50 per share, and the stock price of Alignment Corporation common stock on December 31, 2019 was $ 56 per share.

Assuming that Alignment Corporation uses the "intrinsic value" of the SARs as a measure of their "fair value", how much compensation cost, if any, should Alignment report for the fiscal year-ending December 31, 2020?

• $ 0

• $ 1,250,000

• $ 2,000,000

• $ 2,750,000

• None of the above.