A firm with a strategic goal of reducing executive turnover would use _________ to provide an incentive for longer executive tenure.
A) Cash
B) Stock options
C) Golden parachutes
D) Golden handcuffs

Question

Quizplus · Accepted Answer

Golden handcuffs refer to financial incentives provided to executives to motivate them to stay with the company for a longer period of time. It typically involves deferred compensation, stock options, and other long-term incentive plans that vest over a period of years, giving executives a reason to stay with the company for the long haul. This aligns with the firm's strategic goal of reducing executive turnover because it ties the financial benefits of executive compensation to their continued employment with the company, encouraging them to stay and contribute to the firm's growth over the long term. Golden parachutes, on the other hand, are typically provided as severance packages to executives in case of a merger or acquisition and are not aligned with the goal of reducing executive turnover. Cash incentives and stock options can be used, but they may not be as effective in promoting long-term retention as golden handcuffs.

A Firm with a Strategic Goal of Reducing Executive Turnover