Whether Compensation Is Structured to Focus on the Long-Term Depends

question 3

True/False

Whether compensation is structured to focus on the long-term depends on two key factors, firstly, the time horizon relating to the target measure and secondly, the 'lasting' nature of the reward itself.

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Definitions:

Nominal rate

The stated or face interest rate on a loan or investment, not adjusted for inflation or the frequency of compounding.

Compounded annually

A way of calculating interest where the interest is added to the principal at the end of each year, leading to an increase in the amount on which the following year's interest is calculated.

RRSP fund

A Registered Retirement Savings Plan (RRSP) fund is a retirement savings plan sponsored by the Canadian government, allowing citizens to save for retirement on a tax-sheltered basis.

Nominal rate

An interest rate or return quoted on an investment or loan, not adjusted for inflation or other factors.