Profit sharing rewards short-term performance while stock options attempt to reward long-term performance.

Question

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Profit sharing is a form of compensation where employees receive a portion of the company's profits, typically distributed annually or quarterly. This type of incentive program is designed to reward short-term performance as it is directly tied to the company's profitability in the immediate term. On the other hand, stock options give employees the right to purchase company stock at a specified price after a certain period of time has passed. This type of incentive program is intended to reward long-term performance, as the value of the stock will likely increase over time as the company grows and becomes more successful.

Profit Sharing Rewards Short-Term Performance While Stock Options Attempt to Reward