A stock option plan is a compensatory plan if:
A)The employee must work for the company until retirement.
B)It involves a cost to the grantor.
C)The employee must report the option on the employee's current tax return.
D)The employee must have worked for the company for one year.

Question

Quizplus · Accepted Answer

A stock option plan is considered compensatory if it involves a cost to the grantor, which typically means the company granting the option incurs an expense related to the stock options provided to the employees. This is because compensatory stock options are meant to compensate employees, often as a form of incentive or reward, and are recognized as expenses in the company's financial statements.

A Stock Option Plan Is a Compensatory Plan If