Scenario 14.1
Wilkinson Inc., a manufacturer of baby strollers, experiences a decline in sales in the first quarter of a financial year.The top management of Wilkinson meets to discuss ways to improve sales and decides to employ a range of performance-enhancement techniques for its employees.It then entrusts department heads to frame suitable plans for their respective departments.
-Refer to Scenario 14.1.The management of Wilkinson implements a group incentive plan by which the senior executives of the company can purchase company stocks in the future at a predetermined rate.They can sell the stocks when there is an increase in stock prices.This incentive plan is called a(n) _____.

Question

Quizplus · Accepted Answer

The described incentive plan where senior executives can purchase company stocks at a predetermined rate and sell them later for a profit is a stock-option plan. A gainsharing plan involves sharing financial rewards based on improvements in performance measures, a piece-rate plan involves paying employees based on the number of units produced, an employee stock ownership plan involves employees owning a portion of the company through stocks, and a Scanlon plan involves employees sharing a portion of the gains from increased productivity and cost savings.

Scenario 14.1 Wilkinson Inc., a Manufacturer of Baby Strollers, Experiences a Decline