Under a deferred payment incentive schemes managers are likely to:
A) maximise short-term profit.
B) focus on short-term plans.
C) maximise medium and long-term profits.
D) strive for short-term performance.

Question

Quizplus · Accepted Answer

Deferred payment incentive schemes encourage managers to focus on achieving sustainable financial results in the medium to long term, rather than short-term gains. This is because the deferred payment encourages them to consider the impact of their decisions on company profitability in future years, as their bonus payments will be tied to the company's continued success over that period. Therefore, managers are likely to strive for maximising medium and long-term profits.

Under a Deferred Payment Incentive Schemes Managers Are Likely To