How Does Linking Executive Pay to Stock Performance Make Unethical

question 53

Multiple Choice

How does linking executive pay to stock performance make unethical behavior tempting?

• A) Executives can use the advantage of knowing the company's inside information to buy or sell stock and create huge personal gains.
• B) Executives can roll in the stock price into their base pay to avoid paying a huge tax.
• C) Executives will lower the stock prices in order to enjoy bonuses.
• D) Executives can use the employee stock ownership plan to buy their company if it is experiencing financial problems.
• E) The executives can obtain as many shares as they need at a price that is much lower than the market rate.

---

Definitions:

Autonomy

The extent to which a job provides an employee with discretion and independence to schedule their work and determine the procedures in carrying it out.

Substantial Freedom

A significant degree of autonomy or liberty granted to individuals or entities, allowing them to make choices without excessive restrictions.

Independence

The state or condition of being free from external control or influence, able to make decisions or act according to one's own will.

Feedback

The process of telling someone else how you feel about something that person did or said.