Paying executives based on relative stock performance in industry rewards results due to external factors ______ paying executives based on absolute performance in industry.
A) more than
B) less than
C) by the same amount as
D) sometimes more than and sometimes less than

Question

Quizplus · Accepted Answer

Paying executives based on relative stock performance in industry means their compensation is influenced by external factors such as the performance of their competitors in the industry. This can result in executives receiving bonuses or incentives for factors outside of their control, such as changes in market conditions or general economic factors, which can make the results less indicative of individual performance. In contrast, paying executives based on absolute performance in industry focuses solely on individual performance, providing a clearer measure of an executive's contribution to the success of the company. Therefore, executives paid based on relative stock performance may be rewarded less than those paid based on absolute performance.

Paying Executives Based on Relative Stock Performance in Industry Rewards