Business, 07.11.2019 22:31, keidyhernandezm
The board of directors of camcell, inc., wishes to design a ceo compensation plan that will align the personal interests of the ceo with the interests of the shareholders in long-term firm performance. the board wishes the ceo to take more short-term risks in order to achieve potentially higher long-term returns. consequently, the board has decided on an incentive plan that involves payout based on the firm's performance five years in the future. camcell is presently searching for a new ceo. which of the following statements is true?
this plan will be very attractive in luring candidates for the ceo position.
camcell may have to over-compensate its ceo in order to offset the personal risk a ceo would undertake under this plan.
institutional investors disapprove of long-term executive incentive plans and they may sell their blocks of stock in camcell.
this type of plan is likely to cause the ceo to underinvest in r& d in order to boost camcell's long-term profitability.
Answers: 1
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