Wilson Inc. uses stock options as a major compensation incentive for its top executives. On January 1, 2018, 20 million options were granted, each giving the executive owning them the right to acquire one $1 par common shares. The exercise price is the market price on the grant date$10 per share. Options vest on January 1, 2022. They cannot be exercised before that date and will expire on December 31, 2024. The fair value of the 20 million options, estimated by an appropriate option pricing model, is $3 per option. Ignore income tax. On March 1, 2022, when the market price of Wilson's stock was $14 per share, 3 million of the options were exercised.

Which of the following is incorrect? Why?

A. Annual compensation expense is $15 million.

B. On March 1, 2022, the company receives $42 million in cash.

C. On March 1, 2022, the companys shares outstanding increases by 3 million shares.

D. On January 1, 2022, there is no change in the companys shareholders equity.

E. If stock options expire on December 31, 2024, the company does not recognize losses.