A share option plan will be defined as compensatory if it has which one of the following characteristics?
A) The discount from market price for the stock option is greater than either what would be reasonable in an offer of stock to shareholders or others or the per-share amount of issuance costs avoided by not issuing the stock to the public.
B) Employees have 31 days or less from the date the purchase price is set to decide whether or not to enroll in the plan.
C) Almost all full-time employees are able to participate in the plan.
D) The purchase price is based solely on the market price of the stock on the purchase date.

Question

Quizplus · Accepted Answer

A share option plan is considered compensatory if the discount from the market price for the stock option is greater than what would be considered reasonable in an offer of stock to shareholders or others, or the per-share amount of issuance costs avoided by not issuing the stock to the public. This characteristic implies that the company is providing an additional benefit to the employees, which is considered a form of compensation.

A Share Option Plan Will Be Defined as Compensatory If