What is the difference between stock options and an employee stock ownership plan (ESOP)?
A) Stock options carry significant risk, whereas ESOPs are risk-free.
B) Stock options are usually granted to company executives, whereas ESOPs are provided to all employees.
C) In stock options, stocks are placed into a trust, whereas ESOPs give employees the right to buy a certain number of shares of stock.
D) Under stock options, employees can sell their stocks, whereas ESOPs do not allow employees to sell their stocks.
E) Earnings from stock options are exempt from income taxes, whereas earnings from ESOPs are taxable.

Question

Quizplus · Accepted Answer

The main difference between stock options and an employee stock ownership plan (ESOP) is that stock options are usually granted to company executives, whereas ESOPs are provided to all employees. Stock options allow employees to purchase a certain number of shares at a set price, while an ESOP is a retirement plan that provides employees with ownership in the company through stock ownership. ESOPs are designed to benefit all employees, whereas stock options are typically offered to higher-level employees as a form of compensation or incentive.

What Is the Difference Between Stock Options and an Employee