A key argument against executive compensation practices is that they encourage excessive risk-taking because executives receive large bonuses when profits are high:
A)but do not pay penalties when profits are low.
B)but pay large penalties when profits are low.
C)pay high taxes when profits are high.
D)but do not pay high taxes when profits are low.

Question

Quizplus · Accepted Answer

Option A states that executives do not pay penalties when profits are low. This creates a situation where executives are incentivized to take unnecessary risks to increase profits and possibly receive a large bonus, without consequences if it leads to a loss.

A Key Argument Against Executive Compensation Practices Is That They