Please be as detailed as possible and include every calculation with explanations.
Here is the question:
The asset values of companies A, B are both at 1000 million dollars. Each companies is purely financed with equity, with 100 million shares outstanding. The stock prices of companies A, B are both at 10 dollars per share. Both companies hire new CEOs, for a term of five years. Company A pays its CEO call options on 10 million shares with strike price at 10 dollars and a maturity of 5 years. The shares in both cases are new shares issued by the companies.
After 5 years, both companies asset value become 2000 million dollars. Please calculate the share price of company A and B , assuming share prices are accurate representation of asset value.
What are the values of each CEO’s compensation package?