Question - First Link Services granted 4.6 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within four years. The common shares have a market price of $12 per share on the grant date.
1. Ignoring taxes, what is the total compensation cost pertaining to the restricted shares?
2. Ignoring taxes, what is the effect on earnings in the year after the shares are granted to executives?