If a firm's board of directors wants to maximize value for its stockholders in general (as opposed to some specific stockholders),it should design an executive compensation system whose focus is on the firm's long-term value.

Question

Quizplus · Accepted Answer

Designing an executive compensation system that focuses on the firm's long-term value aligns the interests of executives with those of the stockholders and promotes actions that create sustainable long-term value. This benefits all stockholders in general.

If a Firm's Board of Directors Wants to Maximize Value