Arax Group of Companies (AGC) has a group incentive plan for its employees. Under this plan, the company sets aside a portion of its profits and divides it among employees. Which of the following plans has the company adopted?

Question

Quizplus · Accepted Answer

The company has adopted a profit-sharing plan, as it sets aside a portion of its profits and distributes it among employees as an incentive. A gainsharing plan involves sharing cost savings rather than profits, an employee stock ownership plan involves employees owning a portion of the company through stocks, and a defined-benefit pension plan involves providing retirement benefits based on a set formula.

Arax Group of Companies (AGC) Has a Group Incentive Plan