Which of the following statements is true regarding an employee stock ownership plan (ESOP)?
A) ESOPs are also called competency-based pay plans.
B) ESOPs are effective because, like bonuses, they reward recent performance.
C) There exists a strong correlation between ESOPs and employee performance.
D) The financial stake in the company is adequate to use ESOPs as an effective means to motivate employees.
E) Under this plan, employees acquire company shares often at below-market prices.

Question

Quizplus · Accepted Answer

Under an ESOP, employees acquire company shares often at below-market prices. This helps to align employees' interests with those of the company and can serve as a powerful motivator. However, there is not necessarily a strong correlation between ESOPs and employee performance, and they are not also called competency-based pay plans. Additionally, the financial stake in the company may not always be adequate to make ESOPs an effective means to motivate employees.

Which of the Following Statements Is True Regarding an Employee