Why are corporate executives are often guaranteed "golden parachutes" if they should be fired?
A) To give them the incentive to take the higher levels of risk desired by stockholders.
B) To ensure that they exercise great caution in spending stockholders' money.
C) To encourage the most experienced people to apply for the executive positions.
D) To provide a signal to the public that the firm is on solid financial ground.

Question

Quizplus · Accepted Answer

Golden parachutes are typically included in executive contracts as a form of incentive for taking on high levels of risk. This is because executives may be hesitant to pursue potentially lucrative but possibly risky ventures without the security of knowing they will not be left without benefits if they are fired. The golden parachute serves as a form of compensation while also allowing executives to take on more ambitious projects.

Why Are Corporate Executives Are Often Guaranteed "Golden Parachutes" If