Cost of Options to Company
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In 2004, an employee was granted 305 options on the stock of a firm with an exercise price of $20 per option. In 2009, after the options had vested and when the stock was trading at $35 per share, she exercised the option. The firm's income tax rate was 36 percent. What was the after-tax cost to shareholders of remunerating this employee with options?
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Solution Summary
The solution calculates the after-tax cost to shareholders of remunerating an employee with options.
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Cost of Options to Company = 305*20 = $6,100. This is ...
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