Accounting-based bonus plans for executives

Question 1

Which of the following are bonus plans often linked to?

a) Credit analysis
b) Liquidation value
c) Stock market performance
d) Non-financial performance measures
e) Financial performance measures

Answer 1

c,d+e)

Question 2

“The degree of alignment between the objective of the shareholders and the objective of the manager” describes which characteristic of a sufficient bond plan?

a) Controllability
b) Simplicity
c) Congruence
d) Efficiency
e) All of the above

Answer 2

c)