On October 1, 2016, Farmer Fabrication issued stock options for 120,000 shares to a division manager. The options have an estimated fair value of $4 each. To provide additional incentive for managerial achievement, the options are not exercisable unless Farmer Fabrications stock price increases by 2% in three years. Farmer initially estimates that it is not probable the goal will be achieved.

How much compensation will be recorded in each of the next three years?