In compensation plans,a stock option is:
A)categorized as a long-term motivational device.
B)usually reserved for employees who affect long-term results.
C)most effective when the exercise price is more than the market price of the stock at issuance.
D)All the above are correct.

Question

Quizplus · Accepted Answer

A) Stock options are categorized as long-term motivational devices because they incentivize employees to work towards the long-term success of the company.
B) Usually, stock options are reserved for employees who affect long-term results, such as executives or managers who have a direct impact on the company's performance.
C) Stock options are most effective when the exercise price (the price at which the employee can buy the shares) is more than the market price of the stock at issuance. This incentivizes the employee to work towards raising the stock price in order to realize a profit when they exercise their options.

In Compensation Plans,a Stock Option Is