Which benefit plan allows employees to own shares in the company through defined contributions?

Which benefit plan allows employees to own shares in the company through defined contributions?

• A. ERP
• B. Exit interview
• C. ESOP
• D. Equity partnership

Answer: (C)

An Employee Stock Ownership Plan (ESOP) is a defined-contribution benefit plan that gives employees an ownership stake in the employer. The company contributes stock or cash to buy stock for the ESOP, and the shares are allocated to employees’ accounts, usually based on compensation or years of service and vesting schedules. Over time, employees accumulate ownership interests and can receive distributions when they retire, leave, or at certain plan events, often in the form of company stock or cash. This setup ties employees’ interests to the company’s performance, which is why it’s described as ownership through a defined contribution plan. The other options don’t fit: ERP is software for resource planning, not a benefit plan; an exit interview is a offboarding step; an equity partnership is a form of ownership outside of a defined-contribution retirement plan.

An Employee Stock Ownership Plan (ESOP) is a defined-contribution benefit plan that gives employees an ownership stake in the employer. The company contributes stock or cash to buy stock for the ESOP, and the shares are allocated to employees’ accounts, usually based on compensation or years of service and vesting schedules. Over time, employees accumulate ownership interests and can receive distributions when they retire, leave, or at certain plan events, often in the form of company stock or cash. This setup ties employees’ interests to the company’s performance, which is why it’s described as ownership through a defined contribution plan. The other options don’t fit: ERP is software for resource planning, not a benefit plan; an exit interview is a offboarding step; an equity partnership is a form of ownership outside of a defined-contribution retirement plan.