What Is the Drawback of Stock Ownership as a Form

question 27

Multiple Choice

What is the drawback of stock ownership as a form of incentive pay?

• A) Financial benefits mostly come when the employee leaves the organization.
• B) Employees have the right to participate in votes by shareholders, hence reducing the negotiating power of the employer.
• C) It causes the employers to lose control over their employees.
• D) The employees will not benefit even if the organization is performing well.
• E) Stock options do not provide any ownership to employees, instead it offers an equivalent sum.

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Definitions:

Operating Cash Flow

The amount of cash generated by a company's regular business operations, indicating its ability to cover operational costs and investments.

Business Activities

Business activities encompass all actions undertaken by a company to produce goods, provide services, or otherwise create economic value.

Net Income

The final financial gain of a company, calculated by removing all expenses and taxes from the gross revenue.

Financial Leverage

The use of borrowed funds (debt) to finance the purchase of assets, with the expectation that the profits made from this investment will be greater than the interest payable.