What term describes management and other key personnel sharing in profits?

• A. Stock options
• B. Profit sharing
• C. Bonus pool
• D. Salary increase

Answer: (B)

Profit sharing is a form of incentive compensation where a portion of the company’s profits is distributed among employees, often including management and other key personnel. This approach ties part of pay to how well the business performs, motivating those who contribute to profitability. It differs from stock options, which grant the right to buy stock rather than directly sharing profits; a bonus pool is a general pool for bonuses and may not be tied to overall profits; and a salary increase is a fixed raise not inherently linked to profits. So the term that best describes sharing in profits is profit sharing.