I know this is an easy calculation but I don't understand why should I divide by 4 two years into the vesting period? Or does someone have a different way to calculate compensation expense with forfeitures?
A restricted stock award was granted at the beginning of 2005 calling for 3,000 shares of stock to be awarded to executives at the beginning of 2009. The fair value of one option was $20 at grant date. During 2007, 100 shares were forfeited because an executive left the firm.
What amount of compensation expense is recognized for 2007?
Answer: Total compensation expense at grant date is $60,000 (3,000 x $20). The service period is four years ($20×5 – $20×8). Annual expense recognized is $15,000 ($60,000/4).
Through $20×6, a total of $30,000 of compensation expense is recognized. After the forfeit, only 2,900 shares remain to be awarded.
Annual compensation expense for the remaining two years before considering forfeited shares is therefore $14,500 [(2,900 x $20)/4].
The expense for the two years associated with the 100 shares forfeited is $1,000 [(100 x $20)/2].
For $20×7, subtracting the reversal of the $1,000 yields $13,500 as the final amount of expense to be recognized.
BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8
.