Which of the Following Is Not a Purpose of Equity-Based

question 46

Multiple Choice

Which of the following is not a purpose of equity-based compensation?

• A)Provides both risk and incentives to employees
• B)Motivates employees by aligning employee and employer incentives
• C)Avoids compensation limits for certain publicly traded company executives
• D)Provides a low- or no-cost form of compensation

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Definitions:

Liquidation Surplus

The amount of money remaining after all liabilities and obligations of a liquidating entity have been settled, which is then distributed to shareholders.

Preference Shares

Shares that give holders preferential rights over common shareholders regarding dividends and assets distribution upon liquidation.

Ordinary Shares

Securities that represent ownership in a corporation, giving the holder voting rights and a share in the company's profits via dividends.

Deferred Creditor

An entity to whom a payment is owed but the payment is delayed or deferred to a future date.