The payment to executives from a performance-type plan is NEVER based on the
A) market price of the common shares.
B) return on assets (investment).
C) return on common shareholders' equity.
D) sales.

Question

Quizplus · Accepted Answer

The payment to executives from a performance-type plan can be based on return on assets, return on common shareholders' equity, sales or other performance indicators, but it is NOT based on the market price of common shares. The market price of common shares is subject to market fluctuations and does not necessarily reflect the company's performance, so it is not a reliable performance indicator for executive compensation.

The Payment to Executives from a Performance-Type Plan Is NEVER