The success of bonus compensation as an incentive hinges on:
A) The executive in question
B) The success of the firm
C) The match between the plan and the firm's strategic objectives
D) The positive link between shareholder wealth and personal wealth maximization

Question

Quizplus · Accepted Answer

The success of bonus compensation as an incentive depends on the match between the plan and the firm's strategic objectives. If the bonus plan is not aligned with the company's goals, it may not motivate executives to perform in a way that benefits the company in the long run. Therefore, it is crucial to design bonus plans that are directly linked to the company's strategic objectives.

The other options (A, B, and D) are not comprehensive enough to solely describe what makes bonus compensation a successful incentive. While the executive in question may contribute to the success of the plan, it is not the only factor. Similarly, the success of the firm and the positive link between shareholder wealth and personal wealth maximization are essential factors but not sufficient on their own.

The Success of Bonus Compensation as an Incentive Hinges On