An arrangement in which employees and/or managers contribute a portion of their salaries and wages, over time, toward purchasing shares of a company's stock from the founder until they own the company outright, is referred to as:
A) an IPO.
B) a leveraged buyout.
C) a hostile takeover.
D) an ESOP.

Question

Quizplus · Accepted Answer

The arrangement described in the question is known as an ESOP, which stands for Employee Stock Ownership Plan. This is a type of retirement plan that allows employees to become partial owners of the company they work for by purchasing shares of the company's stock over time. The contributions are typically made on a pre-tax basis, which can provide tax benefits to both the employee and the company. Eventually, the employees and/or managers may own enough shares to gain control of the company. This is different from an IPO (initial public offering), which is the first time a company's stock is made available to the public for purchase. It is also different from a leveraged buyout or a hostile takeover, which both involve acquiring a company through means other than gradually purchasing shares over time through an ESOP.

An Arrangement in Which Employees And/or Managers Contribute a Portion