Executive Pay Based on Relative Performance

question 257

Multiple Choice

Executive pay based on relative performance:

• A) makes little sense, but has still been widely adopted.
• B) makes little sense and has not been widely adopted.
• C) makes a lot of sense and has been widely adopted.
• D) makes a lot of sense, but has not been widely adopted.

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Definitions:

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Bulk Purchasing

The process of buying goods in large quantities at a discounted rate to save money and increase profit margins.

Franchisors

Companies or individuals that grant the license to third parties to conduct business under their brand and operational model.

Ethical Business Conduct

The practice of conducting business in a manner that is morally right, honors principles of fairness and integrity, and respects the rights of all stakeholders.