The problem with tying executive pay to stock prices is that:
A) many factors other than executive effort and ability affect stock prices.
B) executives can manipulate stock prices.
C) stock price does not reflect firm performance.
D) executives prefer more straightforward compensation schemes that reduce their risk.

Question

Quizplus · Accepted Answer

There are many external factors such as market trends and economic conditions that can affect stock prices beyond the efforts and abilities of the executives. Therefore, tying executive pay solely to stock prices can be unfair and inappropriate.

The Problem with Tying Executive Pay to Stock Prices Is