What compensation component grants key executives the contractual right to purchase company stock at a predetermined fixed price over a specified future timeframe?
AStock Option Plan
BRestricted Stock Unit (RSU)
CEmployee Stock Ownership Plan (ESOP)
DProfit Sharing
Explanation
• Stock Option Plans give executives the right to purchase corporate stock at a set strike price within a future period.
• ESOPs distribute company shares to general employees across the workforce.
• Stock options align executive performance with shareholder value creation.
Exam Relevance
- Topic: Compensation & Benefits
- Subtopic: Executive Compensation
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