An Incentive Payment

question 33

Multiple Choice

An incentive payment:

• A)is part of an employee's base wage.
• B)ties pay increases directly to an employee's performance.
• C)is made to provide for items that are in short supply.
• D)refers to psychological returns employees believe they receive in the workplace.
• E)is non-taxable and therefore highly preferred by employees.

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Definitions:

Clientele Effect

The theory that firms attract equity investors at least in part because of their dividend-paying policies. The firm has a “clientele” of stockholders whose need for current or deferred income matches the firm’s dividend practices. The implication is that it isn’t a good idea to change dividend policies because such a change is bound to displease most stockholders.

Dividends

Payments made to shareholders out of a company's profits.

Steady Source

A consistent and reliable means of obtaining something, such as income or information.

Clientele Argument

A theory suggesting that companies attract investors whose preferences align with the company's policies regarding dividends, financing, and investment.