Question

Cordero Corporation has an employee stock-purchase plan which permits all full-time employees to purchase 10 shares of common stock on the third anniversary of their employment and an additional 15 shares on each subsequent anniversary date. The purchase price is set at the market price on the date purchased and no commission is charged. Discuss whether this plan would be considered compensatory.

Short answer

No, the conditions of non-compensatory plan are met here.

Step-by-step solution

The given statement follows non-compensatory concept

This arrangement won’t be considered compensatory since it meets the states of a non-compensatory plan.

Three non-compensatory conditions are as follows

(1) Full-time representatives might take part on inequitable premise,

(2) the markdown from market cost is little, and

(3) the arrangement offers no substantive option highlight.