SSG Cycles manufactures and distributes motorcycle parts and supplies. Employees are offered a variety of share-based compensation plans. Under its nonqualified stock option plan, SSG granted options to key officers on January 1, 2021. The options permit holders to acquire 7 million of the company’s $1 par common shares for$27 within the next six years, but not before January 1, 2024 (the vesting date). The market price of the shares on the date of grant is $29 per share. The fair value of the 7 million options, estimated by an appropriate option pricing model, is$8.10 per option.