Equity-based compensation plans typically have which limitation?

Equity-based compensation plans often focus on aligning employee interests with those of shareholders, and one common limitation in these plans is that they can be restricted to specific employee categories, often including executives. The rationale behind this is that equity compensation is typically designed to incentivize leadership and key talent who have a significant impact on a company's performance and strategic direction.

While it may be beneficial for all employees to have equity in the company, many plans are structured to reward those in higher-level positions due to their ability to drive long-term company value. This focus allows companies to attract and retain top talent while ensuring that the primary beneficiaries are those most likely to influence the company's success.

In contrast, the other options suggest inclusivity or requirements that may not universally apply. Not all equity compensation plans are required to include all employees or comply with ERISA, which applies mainly to retirement plans. Additionally, the limitation to a certain type of stock does not reflect the broader intent of equity plans, which can encompass various equity instruments beyond a single type of stock.