Question

Lance Chips granted restricted stock units (RSUs) representing 40 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within four years. After the recipients of the RSUs satisfy the vesting requirement, the company will distribute the shares. The common shares had a market price of $5 per share on the grant date. The total compensation cost pertaining to the restricted stock units is_____________.

Answer 1

Answer:

$200 million

Explanation:

Data provided in the question

Number of granted restricted stock = 40 million at $1 par common shares

The market price per share = $5

So, the total compensation cost is

= Number of granted restricted stock × market price per share

= 40 million × $5 per share

= $200 million

Basically we multiplied the number of granted restricted stock with the market price per share