Various executive compensation plans have been employed to motivate managers to make decisions that maximize shareholder wealth.These include:
A) cash bonuses based on length of service with the firm
B) bonuses for resisting hostile takeovers
C) requiring officers to own stock in the company
D) large corporate staffs
E) a,b,and c only

Question

Quizplus · Accepted Answer

Requiring officers to own stock in the company aligns their interests with those of the shareholders, as they will benefit directly from increases in stock price. Cash bonuses based on length of service with the firm and bonuses for resisting hostile takeovers do not necessarily incentivize decisions that maximize shareholder wealth. Large corporate staffs are not a compensation plan and do not necessarily relate to executive incentives.

Various Executive Compensation Plans Have Been Employed to Motivate Managers