The best way to align the interest of corporate executives and company owners is probably to pay executives
A) based on annual profit.
B) a fixed salary.
C) based on the stock market value of the company.
D) based on sales of the firm.

Question

Quizplus · Accepted Answer

Paying executives based on the stock market value of the company aligns their interests with those of company owners, as both parties benefit from an increase in the company's stock price. This incentivizes executives to make decisions and take actions that will lead to long-term growth and success of the company, rather than just short-term profit or sales goals. A fixed salary does not necessarily incentivize executives to go above and beyond in their performance, while basing pay on annual profit or sales goals may lead to executives sacrificing long-term growth for short-term gains.

The Best Way to Align the Interest of Corporate Executives