Since monitoring is not perfect, compensation plans should primarily provide managers incentives to
A)put a lot of thought into their work.
B)work long hours.
C)take actions that make stakeholders happy.
D)maximize the value of the firm to the shareholders.

Question

Quizplus · Accepted Answer

Compensation plans should primarily incentivize managers to maximize the value of the firm to the shareholders, as this aligns with the overall goal of the organization. While putting thought into their work, working long hours, and making stakeholders happy are important to a certain extent, they are not the primary objective of a compensation plan.

Since Monitoring Is Not Perfect, Compensation Plans Should Primarily Provide