Since stock prices can fall as well as rise, there is a risk associated with respect to __________ and that risk must be considered in respect to the motivational value of such pay systems.
A) merit pay systems
B) ESOPs
C) lump-sum increases
D) lump-sum payments
E) fringe benefit systems

Question

Quizplus · Accepted Answer

ESOPs (Employee Stock Ownership Plans) involve giving employees the option to buy or receive company stock, which directly ties their compensation to the company's stock price performance. This creates a risk for employees since their compensation can decrease if the stock price falls.

Since Stock Prices Can Fall as Well as Rise, There