Question

Company A granted restricted stock units (RSUs) representing 14 million of its $1 par common shares...

Company A granted restricted stock units (RSUs) representing 14 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within 4 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 $20 per share on the grant date.

Ignoring taxes, what is the decrease in earnings in the year after the RSUs are granted to executives? Round to the nearest million (no decimals). Do not include a dollar sign.

21

Homework Answers

Answer #1
Decrease in earnings due to Compensation expense $          70 million
Market price per share $          20
Multiply: Number of Restricted stock units (RSUs) 14 million
Total compensation $        280 million
This expense is amortized over the four years.
Total compensation $        280 million
Divided by: number of year for vesting period 4
Compensation expense $          70 million
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