Question

ESOP grants vest if combined ROE and solvency ratio targets are met over 3 years. In Year 2, targets seem unachievable; in Year 3, they are exceeded and options vest. How should expense be recognized?

A Reverse Year 1–2 expense permanently
B Recognize nothing until vesting
C Recognize cumulative catch-up in Year 3 to reflect actual vesting
D Recognize straight-line ignoring expectations
E Recognize only intrinsic value at exercise
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