Market price of shares of Anamika Enterprises is Rs.150 per share and to reward the managers for good performance, the company has decided to offer them shares at a price of Rs.120 per share. What type of incentive is being offered here?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Co-Partnership
Option (1) Retirement benefits — Incorrect. These are payments such as provident fund, pension and gratuity, which give security after retirement. Nothing here is linked to retirement.
Option (2) Co-Partnership — Correct. Under co-partnership or stock option, employees are offered company shares at a set price lower than the market price. Here the shares worth Rs. 150 are offered at Rs. 120. It is a financial incentive. The shares also make the managers part-owners, and this feeling of ownership makes them work for the growth of the company.
Option (3) Career advancement opportunity — Incorrect. This is a non-financial incentive. It means giving employees chances to grow and be promoted to higher posts.
Option (4) Employee recognition programmes — Incorrect. This too is non-financial: praising good work, displaying the names of star performers or giving certificates. Selling shares at a lower price is a money benefit, so it is not recognition.
NCERT (2026-27 Edition): “Financial and Non-Financial Incentives … (v) Co-partnership/ Stock option: Under these incentive schemes, employees are offered company shares at a set price which is lower than market price. Sometimes, management may allot shares in line of various incentives payable in cash. The allotment of shares creates a feeling of ownership to the employees and makes them to contribute for the growth of the organisation. …” “(vi) Retirement Benefits: Several retirement benefits such as provident fund, pension, and gratuity provide financial security to employees after their retirement. …” |