A company announces an overnight follow-on offering of 15 million shares priced at $42 per share, a 4.5% discount to the closing price of $44. The offering includes 10 million primary shares and 5 million secondary shares from the CEO. What are the total gross proceeds, and how are they split?

Why A — Total proceeds of $630 million: $420 million to the company and $210 million to the CEO

Total gross proceeds are 15 million shares x $42 = $630 million. The company receives proceeds from the 10 million primary shares (10 million x $42 = $420 million), and the CEO receives proceeds from the 5 million secondary shares (5 million x $42 = $210 million). Both amounts would be reduced by underwriting fees. The 4.5% discount to the closing price is typical for overnight follow-on offerings, which are marketed and priced in a single evening session. The CEO's sale would also need to comply with any applicable lock-up agreements and insider trading policies.