In the past,the compensation of chief executive officers of corporations was based on:
A)the assumption that CEOs should be major stockholders of the corporations that they managed.
B)a generally accepted principle that CEOs should earn no more than 40 times the compensation of the company's lowest-paid employee.
C)company profitability and increases in the value of their firm's stock.
D)the size of the company.

Question

Quizplus · Accepted Answer

In the past, the compensation of chief executive officers of corporations was typically based on company profitability and increases in the value of their firm's stock, as these were seen as the clearest indicators of their success as leaders. A CEO who could drive up profits and stock value was seen as adding the most value to the corporation, and so would be rewarded accordingly. Today, compensation packages for CEOs may also include stocks, bonuses, and other incentives, but the basic principle that compensation is tied to company performance remains the same.

In the Past,the Compensation of Chief Executive Officers of Corporations