Leah, the CEO of SteadyResults Corp

question 45

Multiple Choice

Leah, the CEO of SteadyResults Corp., feels that she is underpaid, so she hires a compensation consultant to survey actual competitors of the company.According to agency theory, if SteadyResults performs poorly, her salary will most likely:

• A)remain the same as CEO salary is based only on performance.
• B)be withheld and paid at a later date as the company is doing poorly.
• C)be increased in order to retain her.
• D)remain the same as the company is doing poorly.

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Definitions:

Book Value

The net value of a company's assets as recorded on its balance sheet, often compared to its market value.

Equipment Account

An account on the balance sheet that represents the total cost of machinery and equipment owned by a company, less accumulated depreciation.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was acquired, representing the reduction in value of the asset over time.

Book Value

The net value of an asset or liability recorded on the balance sheet, often different than its fair market value.