Sam Lawson is a vice president at a large communications firm. His compensation

Question

Sam Lawson is a vice president at a large communications firm. His compensation includes a salalry of $400,000, a bomus of $200,000 and a stock option package that allows him to purchase 30,000 shares of the company's stock at $45 per share. He can exercise the option anytime within a three-year period that starts on the first of next month. The stock is now selling at $62.50 per share. If the current price holds until the first of the month, and Sam exercises his option, how much will he make this year?

Explanation / Answer

He can make 400,000 +200,000 +[(30,000)(62.50-45)= 525,000]
Grand total of 1,125,000.

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