When executive pay is linked closely to the firm's performance it is not possible for executives' pay to increase when the company's share price is falling.

Question

Quizplus · Accepted Answer

Executive pay can still increase even if the company's share price is falling if their compensation package includes elements not directly tied to share price, such as bonuses for meeting certain operational targets or non-equity incentives.

When Executive Pay Is Linked Closely to the Firm's Performance