Which One of the Following Forms of Compensation Is Most

question 32

Multiple Choice

Which one of the following forms of compensation is most apt to align the interests of managers and shareholders?

• A) A fixed salary
• B) A salary that is linked to current company profits
• C) A salary that is paid partly in the form of the company's shares
• D) A salary that is linked to the company's market share

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Definitions:

Dividend Payout

Dividend payout refers to the portion of a company's earnings distributed to shareholders as dividends.

Profit Margin

A financial metric used to assess a company's profitability by calculating the percentage of revenue that exceeds the costs of goods sold.

Retained Earnings

The portion of a company's profits not distributed as dividends but reinvested in the business.

Dividend Payout Ratio

The fraction of net earnings a firm pays to its shareholders as dividends, expressed as a percentage.