Executive compensation in the United States
A) is dominated by performance-based compensation that ensures fair and just pay for corporate executives.
B) is dominated by performance-based compensation designed to reduce agency problems.
C) cannot be linked to stock prices as this would create a conflict of interest with existing shareholders.
D) is well below levels in Europe and Asia.

Question

Quizplus · Accepted Answer

Executive compensation in the United States is dominated by performance-based compensation designed to reduce agency problems. This is because there is a principal-agent problem in corporations where the interests of shareholders may not align with those of executives. Therefore, performance-based compensation is designed to incentivize executives to work in the best interest of shareholders.

Executive Compensation in the United States