Which of the Following Compensation Methods Is NOT Likely to Reduce

question 81

Multiple Choice

Which of the following compensation methods is NOT likely to reduce agency costs between shareholders and managers?

• A) Share compensation-giving the CEO shares in the company as part of her salary.
• B) A golden parachute-a guaranteed large lump-sum payment in the event that the CEO is fired.
• C) A higher salary than that of other CEOs in similar companies.
• D) Performance bonuses-a higher bonus if the company's cash flows are higher than expected.

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Definitions:

Catastrophic Collision

A high-energy impact event between two celestial bodies or terrestrial objects causing significant changes or destruction.

Terrestrial Planets

Planets that are primarily composed of silicate rocks or metals, with a solid surface, similar to Earth.

Gas Giants

Large planets composed mostly of hydrogen and helium gases, with a small rocky core, notably including Jupiter and Saturn in our solar system.

Crater

A bowl-shaped depression formed by the impact of a meteorite or volcanic activity.