Discussion
A corporate wide pay plan that uses a structured formula to allocate a portion of annual company profits to employees is known as :
Answer: B
A corporate wide pay plan that uses a structured formula to share a portion of annual company profits with employees is profit sharing. Gain sharing is based on gains in productivity or savings in costs of a unit, and an ESOP gives employees ownership of shares. Since only profit sharing fits the description, 'all of the above' is wrong. The formula in profit sharing ties the payment to company profits for the year and does not depend on the output of the employee's own unit. Gain sharing, by contrast, is based on improvements in productivity, and ESOPs give workers stock in the company.
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