At the heart of most executive performance-based incentive plans is the idea that
A) at the executive level, status and image are as important as actual compensation.
B) executives should be rewarded if the organization grows in profitability and value over a period of years.
C) executive compensation should be based on the organization's current performance in the stock market.
D) executives are more focused on their base compensation than they are on the variable pay.

Question

Quizplus · Accepted Answer

Most performance-based incentive plans are designed to reward executives based on the organization's growth in profitability and value over a period of time, often several years. This aligns the executives' interests with those of the organization and encourages them to make decisions that are in the long-term best interest of the company. Status and image, as well as the organization's current performance in the stock market, may be factors in executive compensation, but they are not usually the primary drivers of performance-based incentive plans. Similarly, while base compensation is important, the variable pay component is often seen as a more powerful motivator for executive performance.

At the Heart of Most Executive Performance-Based Incentive Plans Is