Question

Consider stock-based compensation: stock options, restricted stock and stock appreciation rights. Which of the following statements is FALSE?

	a.	Stock options only impact earnings in the year of issue.
	b.	Stock options and other share-based awards may have a dilutive impact on earnings per share.
	c.	Restricted stock and restricted stock units are now frequently used because compensation expense is typically lower as compared to compensation expense for stock options.
	d.	Stock appreciation rights give the employee compensation (stock or cash) at a future date, based on the market price at the date of exercise in excess of a pre-established price.
	e.	All three types require recording compensation expense over multiple accounting periods related to service and vesting.

Answer 1

Which of the following statements is False?

Answer: All the given options are true except option A - Stock options only impact earnings in the year of issue. Normally there will be a service period before declaration of option scheme and the employees exercising options. So, the stock options will not impact earnings in the year of issue but will defer until the stock options are vested and are eligible for employees to exercise the same.