3. Share when not transferable are called Restricted shares These are the most common type of stock options. These are given by the companies because they impose a condition on the employees to stay in the company for a particular period of time or until completion of a mile stone. These may effect the value since when the employees stays and works for achievement of mile stones the performance of the company will be good that may increase the price of the shares which inturns increases the value of the option.
4. An execise period of 90 days is given to motivate the employees to stay in the company. Employees may not have money to exercise the option after they leave the company. This is generally used for startups.
As a new graduate, you have taken a management position with Exotic Cuisines, Inc., a restaurant...
A controversial practice with employee stock options is repricing. What happens is that a company experiences a stock price decrease, which leaves employee stock options far out of the money or “underwater.” In such cases, many companies have “repriced” or “restruck” the options, meaning that the company leaves the original terms of the option intact, but lowers the strike price. Proponents of repricing argue that because the option is very unlikely to end in the money because of the stock...
SEC registrant, is a fashion retailer that sells men’s and women’s clothing and accessories. As an incentive to its employees, the Company established a compensation incentive plan in which a total of 100,000 options were granted on January 1, 20X1. On that date (the grant date), Wayne’s stock price was $15.00 per share. The significant terms of the incentive plan are as follows: • The options have a $15.00 “strike” or exercise price (the price the employee would pay to...
Need questions 1-4 answered. Glam Time, Inc. ("Glam Time” or “the Company'), an SEC registrant, is a fashion retailer that sells men's and women's clothing and accessories. As an incentive to its employees, the Company established a compensation incentive plan granting 100,000 options on January 15, 20X0. On that date (the grant date), GlamTime's stock price was $15.00 per share. The significant terms of the incentive plan are as follows: • The options have a $15.00 "strike” or exercise price...
Working alone, complete the following: You receive 1000 options today, Nov 3 2019. The option grant has an exercise price of 510. The company share price is $10 today. The options vest 25% per year for the next 4 years Assume the company stock will appreciate 10% per year for the next 4 years. Assuming you keep all your options until the grant is fully vested, what is the value of the total option grant and the vested portion to...
Glam Time, Inc. ("Glam Time" or "the Company"), an SEC registrant, is a fashion retailer that sells men's and women's clothing and accessories. As an incentive to its employees, the Company established a compensation incentive plan granting 100,000 options on January 15, 20X0. On that date (the grant date), Glam Time's stock price was $15.00 per share. The significant terms of the incentive plan are as follows: • The options have a $15.00 "strike" or exercise price (the price the...
Sunny Side, Inc. granted its CEO 5,000 options on July 1, 2016 with an exercise price of $25. The market value of options based on an option pricing model is $300,000. The market price of the stock on July 1, 2016 was $30 per share. The vesting period is two years and options expire on July 1, 2021. The fiscal year end is December 31. If instead of issuing the options the company issued restricted stock with a three-year vesting...
You are considering a position as the director of finance in a company listed on the Lusaka Securities Exchange Plc. Since the firm is still new, the salary is not that great but your package will include call options on 5,000 shares of the company. The shares are currently selling for K5 per share. The call options granted to you if you accept the job have an exercise price of K5 and expire in three years. The call options cannot...
Case: ZillionaireOn January 1, 2019, Zillionaire (the Company) issued to certain employees 1,000,000 equity-settled stock option awards. The employees will vest in differing numbers of options depending on the cumulative amount of net income the Company earns over the four fiscal years1 following the date of grant, and their continued employment with the Company. The exercise price of the awards is $31.50, which was the Company’s closing share price on the NASDAQ National Market on the date of grant. The...
Identifying and Analyzing Financial Statement Effects of Share-Based Compensation Weaver Industries implements a new share-based compensation plan in 2014. Under the plan, the company's CEO and CFO each will receive non-qualified stock options to purchase 100,000, no par shares. The options vest ratably (1/3 of the options each year) over three years, expire in 10 years, and have an exercise (strike) price of $27 per share. Weaver uses the Black-Scholes model to estimate a fair value per option of $18....
On January 1, 20X5, Company D(CD), a public company with a December 31 year-end, granted 500 options to each of its 300 senior employees. The company initially estimated that 3 of the employees would leave the company in each of the three years the options are outstanding. The market price at the time the options were granted was $ 35. The exercise price for each option was $ 40. The available options must be exercised by the end of 2018...