Objective of Executive Compensation in Corporate Governance

Very Easy Corporate Governance Executive Compensation

In recent years, executive compensation packages have been a topic of significant attention and debate in the field of corporate governance. These packages often include base salary, bonuses, stock options, and other incentives. The rationale for providing such compensation is to align the interests of executives with those of the shareholders.

Which of the following statements most accurately describes the primary objective of executive compensation in regard to corporate governance?

To ensure that executives receive pay commensurate with their level of education and experience.

To incentivize executives to act in the best interests of the shareholders.

To provide a fixed salary that guarantees job security for the executives.

Hint

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