When the right to purchase stock in the future is used as a substitute for a cash bonus, the company is granting

Question

Quizplus · Accepted Answer

When a company grants the right to purchase stock in the future as a substitute for a cash bonus, they are giving what is referred to as stock options. Stock options give the employees the right, but not the obligation, to purchase shares of the company at a predetermined price in the future. This serves as a form of compensation for the employees and is often used as a way to align their interests with the company's success. Post-retirement benefits and post-employment benefits refer to benefits given to employees after they retire or leave the company, and compensated absences refer to paid time off that employees are entitled to, such as vacation days or sick days.

When the Right to Purchase Stock in the Future Is