Which of the Following Statements Regarding Compensation Policies Is FALSE

question 37

Multiple Choice

Which of the following statements regarding compensation policies is FALSE?

• A)Increasing the pay-for-performance sensitivity comes with the added benefit of reducing managers' risk.
• B)Stock and option grants give managers a direct incentive to increase the stock price to make their stock or options as valuable as possible.
• C)By tying compensation to performance,the shareholders effectively give the manager an ownership stake in the firm.
• D)During the 1990s,most companies adopted compensation policies that more directly gave managers an ownership stake by including grants of stock or stock options to executives.