Since stock prices can fall as well as rise, there is a risk associated with respect to __________ and that risk must be considered when evaluating the motivational value of such pay systems.
A) merit pay systems
B) employee stock ownership plans
C) lump sum increases
D) lump sum payments
E) fringe benefit systems

Question

Quizplus · Accepted Answer

Employee stock ownership plans (ESOPs) directly link compensation to the company's stock price, making them subject to market fluctuations. This introduces a risk for employees, as their compensation can decrease if the stock price falls. Other options like merit pay, lump sum increases/payments, and fringe benefits do not inherently fluctuate with the stock market.

Since Stock Prices Can Fall as Well as Rise, There