To combat the managerial myopia problem, corporations tie a significant portion of total compensation for top executives to:
A)short-term stock-price performance.
B)stock options tied to long-term stock-price performance.
C)short-term accounting net income performance.
D)short-term accounting ROE performance.

Question

Quizplus · Accepted Answer

Tying a significant portion of top executives' compensation to long-term stock-price performance incentivizes them to focus on the company's overall success and growth rather than just short-term gains. This helps to combat the managerial myopia problem where executives prioritize short-term goals at the expense of long-term sustainability. Options also offer the additional benefit of aligning executives' interests with those of shareholders by making them shareholders themselves. Tying a significant portion of total compensation for top executives to stock options tied to long-term stock-price performance incentivizes them to focus on long-term growth and success rather than short-term gains. This helps combat the managerial myopia problem.

To Combat the Managerial Myopia Problem, Corporations Tie a Significant