On January 1, Year 1, Fields Corporation granted 400,000 stock options to certain executives. The vesting period is 3 years. The options are exercisable no sooner that December 31, Year 3 and expire on January 1, Year 7. Each option can be exercised to acquire one share of $10 par common stock for $15. An appropriate optionpricing model estimates the fair value of each option to be $13 on the date of grant.

Fields chooses to adjust the fair value of the options for the estimated forfeitures. If unexpected turnover in Year 2 caused Fields to estimate that 14% of the options would be forfeited, what amount of compensation expense should Fields recognize in Year 2?

A. $1,248,000

B. $2,981,333

C. $1,733,333

D. $0