A Disadvantage of Using Stock Options to Compensate Managers Is

question 52

Multiple Choice

A disadvantage of using stock options to compensate managers is that

• A)it encourages managers to undertake projects that will increase stock price.
• B)it encourages managers to engage in empire building.
• C)it can create an incentive for managers to manipulate information to prop up a stock price temporarily, giving them a chance to cash out before the price returns to a level reflective of the firm's true prospects.
• D)All of the options

---

Definitions:

Conceptualizes

The process of forming a concept or notion about something in the mind, making abstract ideas or understanding concrete or general compositions.

Existential Analysis

A form of psychotherapy that seeks to help individuals confront and understand the existential questions and concerns of life, such as freedom, death, and meaning.

Existential Questions

Profound questions concerning the nature of existence, purpose, and the human condition, often explored in philosophy and psychology.

Perennial

Lasting for an indefinitely long time; enduring or continually recurring.