While CEO of General Electric,Jack Welch was a very successful corporate manager,he also loaded up his retirement program with numerous unusual benefits such as rented apartments,free airplanes,and numerous club memberships.The owners (stockholders)were generally unaware of these benefits.The source of conflict between owners and managers in this case was:
A)the choice of effort of Mr.Welch while he was CEO.
B)perquisite taking on the part of Mr.Welch.
C)differential risk exposure between Mr.Welch and the typical stockholder.
D)overinvestment in company offices by Mr.Welch.

Question

Quizplus · Accepted Answer

The source of conflict between owners (stockholders) and managers (Jack Welch) in this case was the perquisite taking on the part of Mr. Welch, such as rented apartments, free airplanes, and club memberships. The owners were generally unaware of these benefits, which shows a conflict of interest between the owners and the CEO's personal interests. Hence, option B is the correct choice.

While CEO of General Electric,Jack Welch Was a Very Successful