Question

Which of the following characteristics describe an ESOP? (choose 2)

a) They offer distribution of shares of company stock to employees
b) They are considered a temporary "thank you"
c) They offer a steady stream of income
d) They are calculated weekly or monthly
e) they are gaining in popularity

Answer 1

ESOPs distribute shares of company stock to employees and are increasing in popularity. They provide a sense of ownership and potential long-term benefits, but do not guarantee a steady income and are not just a temporary 'thank you.'

Step-by-step explanation:

The characteristics that describe an Employee Stock Ownership Plan (ESOP) are:

1. They offer the distribution of shares of company stock to employees.
2. They are gaining in popularity as a means for employees to have an ownership stake in the company they work for.

While ESOPs provide a way for employees to receive company stock, contributing to their long-term wealth accumulation, they should not be mistaken for a simple 'thank you' or a guaranteed steady stream of income.

Unlike regular salary or wage payments that are calculated weekly or monthly, ESOP dividends and the value of the shares are subject to the company's financial performance and market conditions. ESOPs afford employees a voice in the company's future, as shareholders are often allowed to vote on major company decisions.