On January 1, 2020, Excelsior Ltd., a publicly traded company, granted 200 share appreciation rights (SARs) to each of its 300 employees. The vesting date is December 31, 2022, and the expiration date is December 31, 2023. The benchmark price is $65. The fair value of each SAR has been determined using an option-pricing model. The following fair values of each SAR and relevant share price are provided:

Fair value, January 1, 2020	$10.00
Fair value, December 31, 2020, year end	$12.00
Fair value, December 31, 2021, year end	$15.50
Share price, 2020 year end	$68.00
Share price, 2021 year end	$74.00

When the SARs were granted on January 1, 2020, the company anticipated that 80% of the employees would continue working for Excelsior for the duration of the vesting period and would qualify for the SARs. At the 2020 year end, 5% of the eligible 300 employees had left the company, and it was estimated that another 18% would leave during the remaining vesting period. During 2021, 10% of the original eligible employees left the company, and it was estimated that a further 10% would leave before the SARs vested. What is the amount of the compensation expense to be recorded for the 2021 year?

Question 15 options:

a)

$143,100

b)

$146,000

c)

$280,200

d)

$697,500