In Order to Reduce Agency Problems,managers May Be Provided Compensation

question 5

Multiple Choice

In order to reduce agency problems,managers may be provided compensation that includes

• A) a fixed salary so managers' pay is not at risk, allowing managers to focus on the company's business.
• B) a bonus based on the level of profit achieved during the year.
• C) an option to buy the company's stock.
• D) incentive pay for achieving higher sales than last year.

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Definitions:

Uniform Conformity

The consistent and uniform adherence to a set of standards, rules, or norms across a group or organization.

Organizational Norms

The shared expectations and rules that guide behavior of people within an organization.

Disjunctive Socialization

is a process in which new members of a group or organization have to acquire knowledge and skills that are significantly different from those of existing members.

Institutionalized Socialization

The process by which individuals are taught and trained to internalize and follow the norms, values, and behaviors considered appropriate within a given society or organization.