A new high-growth business has issued stock options to new employees as part of their overall compensation.The options have a strike price of $.25 and vest evenly over 4 years but also automatically vest on a change in control (sale of the company).Jean works for this company and received 10,000 options when she was hired. In April of her third year of the company is acquired by a much larger firm at a price equal to $12.00 per share.Based on this scenario how much would Jean gain from the execution and sale of her shares upon the sale? In a different scenario, the company is not sold but Jean leaves the company after 38 months.How many shares does she have a right to own and how much would it cost her to exercise her options into shares?
A new high-growth business has issued stock options to new employees as part of their overall compensation.The options have a strike price of $.25 and vest evenly over 4 years but also automatically vest on a change in control (sale of the company).Jean works for this company and received 10,000 options when she was hired. In April of her third year of the company is acquired by a much larger firm at a price equal to $12.00 per share.Based on this scenario how much would Jean gain from the execution and sale of her shares upon the sale? In a different scenario, the company is not sold but Jean leaves the company after 38 months.How many shares does she have a right to own and how much would it cost her to exercise her options into shares?
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter1: Introduction To Managerial Accounting
Section: Chapter Questions
Problem 18E
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A new high-growth business has issued stock options to new employees as part of their overall compensation.The options have a strike price of $.25 and vest evenly over 4 years but also automatically vest on a change in control (sale of the company).Jean works for this company and received 10,000 options when she was hired.
- In April of her third year of the company is acquired by a much larger firm at a price equal to $12.00 per share.Based on this scenario how much would Jean gain from the execution and sale of her shares upon the sale?
- In a different scenario, the company is not sold but Jean leaves the company after 38 months.How many shares does she have a right to own and how much would it cost her to exercise her options into shares?
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