As one approach to implementing performance-based pay plans, indexed stock options:
A) allow employees to buy stock at a premium price
B) are also called premium-priced options
C) are used more often than any other plan
D) are designed to ensure that employees are not punished with the economy takes a downturn
E) are accurately described by all of the above

Question

Quizplus · Accepted Answer

Indexed stock options are designed to ensure that employees are not punished if the economy takes a downturn. They are often tied to larger economic indicators, so the value of the stock options is not solely dependent on the performance of the company. This helps to reduce the risk for employees and incentivizes them to work towards overall economic growth, rather than just the success of their specific company. None of the other choices accurately describe indexed stock options.

As One Approach to Implementing Performance-Based Pay Plans, Indexed Stock