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Suppose Norman Industries offered a stock option plan to its managers. On January 1, 2018, options were granted for 40 million $1 par common shares.
Suppose Norman Industries offered a stock option plan to its managers. On January 1, 2018, options were granted for 40 million $1 par common shares. The exercise price is the market price on the grant date--$8 per share. Options cannot be exercised prior to January 1, 2021, and they expire December 31, 2024. The fair value of the 40 million options, estimated using an appropriate option-pricing model is $3 per option. Average market price of the stock is $10 per share during 2018-2020.
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