When Managers' Compensation Plans Are Tied in a Meaningful Manner

question 45

Multiple Choice

When managers' compensation plans are tied in a meaningful manner to the profits of the firm, agency problems:

• A) can be reduced.
• B) will be created.
• C) are shifted to other stakeholders.
• D)are eliminated entirely from the firm.

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Definitions:

Persuasion

The act or process of influencing someone's beliefs, attitudes, or actions through argument, reasoning, or appeal.

Pay Cut

A reduction in the amount of money an employee is paid for their work.

Plant Closings

This term denotes the process of permanently shutting down a manufacturing facility or plant, often due to economic conditions, business strategy changes, or technological advancements.

Organization Persuasion

The strategic attempt by an entity to influence or convince individuals or other organizations to accept certain ideas, actions, or products.