Green Company Is a Calendar-Year U

Multiple Choice

Green Company is a calendar-year U.S. firm with operations in several countries. At January 1, 2013, the company had issued 40,000 executive stock options permitting executives to buy 40,000 shares of stock for $25. The vesting schedule is 20% the first year, 30% the second year, and 50% the third year (graded-vesting) . The fair value of the options is estimated as follows: Assuming Green uses the straight-line method, what is the compensation expense related to the options to be recorded in 2014?

A) $130,667.
B) $200,000.
C) $333,333.
D) $400,000.