Question

Lance Chips granted restricted stock units (RSUs) representing 60 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 $7 per share on the grant date. The total compensation cost pertaining to the restricted stock units is:

Answer 1

$420 million

Step-by-step explanation:

Total compensation cost = Number of restricted stock units (RSUs) × Market price per share of the common stock

Therefore, we have:

Total compensation cost = 60,000,000 × $7 = $420,000,000

Therefore, the total compensation cost pertaining to the restricted stock units is $420 million.