Long-term incentives can include which of the following?

Long-term incentives can include which of the following?

• A. Salary increases
• B. Cash bonuses
• C. Employee stock ownership plans
• D. Commissions on sales

Answer: (C)

Long-term incentives are designed to motivate employees to achieve company goals and align their interests with the long-term performance of the organization. They often take the form of equity or ownership in the company, providing employees with a stake in the company's future success. Employee stock ownership plans (ESOPs) are a primary example of a long-term incentive. These plans give employees an ownership interest in the company through stock options or shares. The value of these options or shares often increases as the company performs well over time, thus directly linking employee rewards to the company's long-term success. This alignment encourages employees to think about the future of the company and contributes to its growth and stability. In contrast, salary increases, cash bonuses, and commissions are generally considered short-term incentives. Salary increases provide immediate compensation adjustments but do not necessarily connect to long-term performance. Cash bonuses are often tied to annual performance metrics, focusing more on short-term goals versus long-term strategic objectives. Similarly, commissions on sales are typically based on immediate results rather than how actions taken today affect the business's long-term trajectory. Given this context, employee stock ownership plans are clearly identified as long-term incentives, promoting not only retention but also an investment in the company's future.

Long-term incentives are designed to motivate employees to achieve company goals and align their interests with the long-term performance of the organization. They often take the form of equity or ownership in the company, providing employees with a stake in the company's future success.

Employee stock ownership plans (ESOPs) are a primary example of a long-term incentive. These plans give employees an ownership interest in the company through stock options or shares. The value of these options or shares often increases as the company performs well over time, thus directly linking employee rewards to the company's long-term success. This alignment encourages employees to think about the future of the company and contributes to its growth and stability.

In contrast, salary increases, cash bonuses, and commissions are generally considered short-term incentives. Salary increases provide immediate compensation adjustments but do not necessarily connect to long-term performance. Cash bonuses are often tied to annual performance metrics, focusing more on short-term goals versus long-term strategic objectives. Similarly, commissions on sales are typically based on immediate results rather than how actions taken today affect the business's long-term trajectory.

Given this context, employee stock ownership plans are clearly identified as long-term incentives, promoting not only retention but also an investment in the company's future.