Which of the Following Best Explains Why a Board of Directors

question 41

Multiple Choice

Which of the following best explains why a board of directors may grant stock options as part of a compensation package?

• A) to reduce the transferability of stocks between stockholders
• B) to bring about a separation of CEO/chair duality
• C) to align incentives between shareholders and management
• D) to change the liability of shareholders from limited to unlimited

---

Definitions:

Reward and Punishment

Behavioral reinforcement concepts where rewards are used to reinforce desired behaviors, whereas punishments are applied to reduce or eliminate undesired behaviors.

Personality

refers to the combination of characteristics or qualities that form an individual's distinctive character, influencing behaviors and attitudes.

Employee Goal Achievement

The successful realization of objectives set by employees within their respective roles, contributing to personal satisfaction and organizational success.

Decision Quality

Refers to the effectiveness and appropriateness of a decision based on its outcomes, considering the information and processes used in making it.