A major problem with ESOPs is that
A) they carry a significant risk for employees.
B) employees are not allowed to participate in votes by shareholders.
C) the stocks within the trust are too widely diversified to earn high returns.
D) any earnings from the trust holdings are taxed at an extremely high rate.
E) they result in reduced profitability for the employees.

Question

Quizplus · Accepted Answer

ESOPs carry a significant risk for employees as their retirement savings become heavily tied to the stock of a single company. If the company experiences financial difficulties or the stock performs poorly, employees' retirement savings can be severely impacted.

A Major Problem with ESOPs Is That