Question

Second Link Services granted restricted stock units (RSUs) representing 16 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 $10 per share on the grant date. 1. Ignoring taxes, what is the total compensation cost pertaining to the restricted stock units

Answer 1

The total compensation cost pertaining to the restricted stock units is $160,000,000

Step-by-step explanation:

In order to calculate the total compensation cost pertaining to the restricted stock units we would have to use the following formula:

Total compensation cost=Fair market value per share× Number of shares

pertaining to the restricted stock units awarded to executives

=$10×16,000,000 shares

=$160,000,000

The total compensation cost pertaining to the restricted stock units is $160,000,000