Chapter 19, Problem 1CMA

To determine

Stock options: Stock options are the stock-based compensation plans provided in the form of an option to buy certain number of shares for a certain price during certain period.

Characteristics of compensatory stock option plans:

• Plans are offered mostly to executives.
• Compensation expense is recorded in the specific years to reflect the service of employees.
• These stock options are based on the performance targets like divisional revenue, or sales revenue, or earnings per share

Characteristics of non-compensatory stock option plans:

• Plans are offered to all employees equally.
• Plans open to all eligible full-time employees.
• Plans offer only a specified period to exercise the options.

To find: The characteristic which is not of non-compensatory stock option plan