Which of the Following Statements About Managerial Compensation Is Correct

question 75

Multiple Choice

Which of the following statements about managerial compensation is correct?

• A) Compensating managers with year-end cash bonuses always motivates managers to do what is best for the company as a whole.
• B) From a manager's standpoint, cash compensation is always preferable over stock-based compensation.
• C) Manager compensation should always be either cash-based or stock-based.
• D) Stock-based manager compensation does not guarantee a future cash benefit to managers.

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Definitions:

Corporate Level

Pertains to major strategic decisions affecting the whole company, typically made by top-level management.

Responsibility Centres

Units within an organization for which managers are responsible, focusing on revenues, costs, or a combination of both, to measure performance.

Budgetary Slack

The practice of underestimating revenue or overestimating expenses to make budget targets more easily attainable.

Window Dress

Window Dressing is a financial strategy used by companies to improve the appearance of their financial statements or investment portfolio, often at the end of an accounting period.