Which of the following statements is true regarding an employee stock ownership plan (ESOP)?

A) Under this plan, employees acquire company shares, often at below-market prices.
B) There exists a strong correlation between ESOPs and employee performance.
C) The financial stake in the company is adequate to use ESOPs as an effective means to motivate employees.
D) ESOPs are effective because, like bonuses, they reward recent performance.
E) ESOPs are also called competency-based pay plans.

A
Explanation: A) Under the employee stock ownership plan, employees acquire stock, often at below-market prices. Research on ESOPs indicates they increase employee satisfaction. But their impact on performance is less clear. ESOPs for top management can reduce unethical behavior.