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Assume that SkyBlue allows its employees to purchase SkyBlue stock at a specific price. What would this type of program be called?

a. profit-sharing plan
b. commission plan
c. gainsharing
d. employee stock ownership plan
e. stock options

1 Answer

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Final answer:

The program where employees can purchase company stock at a specific price is called an employee stock ownership plan (ESOP).

Therefore, the correct answer is: option d). employee stock ownership plan.

Step-by-step explanation:

If SkyBlue allows its employees to purchase SkyBlue stock at a specific price, this type of program would be called an employee stock ownership plan (ESOP).

An ESOP is a program that provides a company's workforce with an ownership interest in the company. Employees usually acquire shares through a special plan and they may obtain them at a special price set by the employer to encourage ownership.

This is distinct from stock options which give the employee the right to purchase stock at a specific price at a future date. Both plans are designed to invest employees in the success of the company and can be a powerful incentive.

ESOP benefits to stockholders include providing a ready market for some or all of the shares owned by shareholders in a closely held company. With an ESOP in place, a majority or controlling shareholder has an exit strategy when he or she is ready to retire.

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