71. Today, stock options are typically being granted to
A. all employees.
B. all exempt employees.
C. low- and middle-level managers.
D. executives.
For many years, stock options had typically been reserved for executives in larger, established companies. More recently, there was a trend toward pushing eligibility farther down in the organization.
72. A(n) _____ plan gives employees the opportunity to buy the company's stock at a previously fixed price.
A. mutual fund
B. individual incentive
C. dividend disbursement
D. stock options
Stock options allow the employee to make a substantial return on investment if the stocks are later sold at a price higher than at which they were bought.
73. By law, what percent of assets must an ESOP invest in its company's stock?
A. 10 percent
B. 51 percent
C. 80 percent
D. 100 percent
An ESOP must, by law, invest at least 51 percent of assets in its company's stock.
74. ESOPs are attractive to organizations for all of the following reasons
except
A. their low investment risk for employees.
B. their tax advantages.
C. their financing advantage.
D. their use as a takeover defense.
An ESOP must, by law, invest at least 51 percent of assets in its company's stock, resulting in less diversification of investment risk. Consequently, employees risk serious financial difficulties if the company does poorly.
75. Gainsharing plans differ from profit-sharing plans in that they
A. distribute payouts more frequently.
B. encourage employee pursuit of organizational goals.
C. pay lump sum payments.
D. can be attached to all types of jobs in the organization.
Payouts are distributed more frequently (monthly or quarterly instead of annually or semiannually) and not deferred.
76. The Scanlon plan is an example of
A. profit sharing.
B. gainsharing.
C. a merit pay plan.
D. an individual incentive plan.
The Scanlon plan shares productivity gains by providing a monetary bonus to employees if the ratio of labor costs to the sales value of production is kept below a certain standard.
77. A(n) _____ plan is a based on group or plant performance that does not become part of the employee's base salary.
A. profit sharing
B. stock option
C. gainsharing
D. individual incentive
Gainsharing programs offer a means of sharing productivity gains with employees.
78. Gainsharing can motivate employees as much as individual plans do because of
A. the controllable nature of the performance measure and the frequency of payouts.
B. the level of employee involvement and management cooperation.
C. the relatively simplistic performance targets and large payouts.
D. the high levels of employee ownership and team-based compensation.
Group and plant performance are perceived by employees to be more controllable and payouts occur on a monthly or quarterly basis.
79. Which one of the following is
not
a necessary organizational condition for successful gainsharing?
A. Management commitment
B. Mechanistic structure
C. Employment security
D. Information sharing on productivity and costs
Management commitment, employment security, and information sharing on productivity and costs are necessary for successful gainsharing.
80. Group incentive pay programs differ from team awards pay programs in that they
A. typically are plant-wide programs.
B. encourage competition between employee groups.
C. measure performance in terms of physical output.
D. de-emphasize the standard-setting process.
Group incentives tend to measure performance in terms of physical output, whereas team award plans may use a broader range of performance measures (like cost savings, successful completion of product design, or meeting deadlines).