Witter House is a calendar-year firm with 460 million common shares outstanding throughout 2024 and 2025. As part of its executive compensation plan, at January 1, 2023, the company had issued 40 million executive stock options permitting executives to buy 40 million shares of stock for $10 within the next eight years, but not prior to January 1, 2026. • The fair value of the options was estimated on the grant date to be $3 per option. •In 2024, Witter House began granting employees stock awards rather than stock options as part of its equity compensation plans and granted 25 million restricted common shares to senior executives at January 1, 2024. .The shares vest three years later. • The fair value of the stock was $16 per share on the grant date. • The average price of the common shares was $16 and $25 during 2024 and 2025, respectively. .The stock options qualify as an incentive plan. The restricted stock does not.

Witter House is a calendar-year firm with 460 million common shares outstanding throughout 2024 and 2025. As part of its executive compensation plan, at January 1, 2023, the company had issued 40 million executive stock options permitting executives to buy 40 million shares of stock for $10 within the next eight years, but not prior to January 1, 2026. • The fair value of the options was estimated on the grant date to be $3 per option. •In 2024, Witter House began granting employees stock awards rather than stock options as part of its equity compensation plans and granted 25 million restricted common shares to senior executives at January 1, 2024. .The shares vest three years later. • The fair value of the stock was $16 per share on the grant date. • The average price of the common shares was $16 and $25 during 2024 and 2025, respectively. .The stock options qualify as an incentive plan. The restricted stock does not.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 19E

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