A disadvantage of options as instruments of performance-related rewards is:
a. that it exposes the executives to market volatility.
b. that it increases opportunistic behavior on the part of the employees who expect to earn these incentives.
c. that the actual monetary gains from such incentives are usually lower than other performance-related incentives provided by organizations.
d. that once an option has been exercised and the executive has sold her shares it will have no continuing effect on her incentives to make better future decisions.
D
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Suppose an excise tax of $1 is imposed on every case of beer sold and sellers are responsible for paying this tax. How would the imposition of the tax be illustrated in a graph?
A) The supply curve for cases of beer would shift to the right by $1. B) The supply curve for cases of beer would shift to the left by less than $1. C) The supply curve for cases of beer would shift to the left by more than $1. D) The supply curve for cases of beer would shift to the left by $1.
Assume that the income effect dominates the substitution effect. When workers experience a ________ price surprise, they ________ perceive that their real wage rate has ________, which leads them to work fewer hours.
A. negative; incorrectly; risen B. negative; correctly; fallen C. positive; correctly; risen D. positive; incorrectly; risen