One Way Often Used to Insure That Management Decisions Are

question 13

Multiple Choice

One way often used to insure that management decisions are in the best interest of the stockholdersis to

• A) tie management compensation to the performance of the company's common stock price.
• B) remove management's perquisites.
• C) tie management compensation to the level of earnings per share.
• D) threaten to fire managers who are seen as not performing adequately.

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Definitions:

Obligation Imposed

A duty or responsibility enforced by law, regulation, or agreement.

Contract Formation

The process whereby parties agree upon and establish the terms of a contract, leading to a binding legal agreement.

Relaxation of Requirements

The easing or reduction of stringent rules, standards, or conditions, often to accommodate special circumstances.

Material Misrepresentation

A statement that is significantly untrue or misleading and, if known to be such, could have influenced the decision-making of a party in a contract or agreement.