Executive compensation is a governance mechanism that seeks to align the interests of managers and owners through salaries, bonuses, and long-term incentive compensation such as stock awards and options.

Question

Quizplus · Accepted Answer

Executive compensation is indeed a governance mechanism designed to align the interests of managers and owners. This is typically achieved through a combination of salaries, bonuses, and long-term incentives such as stock awards and options that are linked to company performance. The aim is to motivate executives to work towards the long-term success of the company, rather than just their own short-term gain.

Executive Compensation Is a Governance Mechanism That Seeks to Align