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?
Total Compensation Cost = _____________ Million
2. Ignoring taxes, what is the effect on earnings in the year after the shares are granted to executives?
Effect on Earning: (Decrease by / Increase by / No effect) _____________ Million