Executive compensation packages often tie performance to bonus and incentive awards, supplemental retirement packages, perquisites, and severance pay, in order to encourage the management team to align their performance with organizational goals. Which of the following compensation proposals is most likely to be in the best interest of the company’s shareholders? A base salary of $500,000 plus perquisites worth $250,000 A base salary of $500,000 plus a stock option package for 250,000 shares that mature in six months A base salary of $500,000 plus a stock option package for 250,000 shares, with 20% of shares maturing at the end of each of the next five years Vision Tech is a software company based out of San Francisco. Its stockholders are mostly individual investors and there is relatively little institutional ownership. If several pension and mutual funds were to take large positions in Vision Tech’s stock, would direct shareholder intervention be more or less likely to motivate the firm’s management? Less likely More likely Vision Tech’s stock price is currently trading at $35 per share. The consensus among analysts is that the intrinsic value of Vision Tech’s stock is $26 per share. Is Vision Tech more or less likely to receive a hostile takeover bid? More likely Less likely
Executive compensation packages often tie performance to bonus and incentive awards, supplemental retirement packages, perquisites, and severance pay, in order to encourage the management team to align their performance with organizational goals. Which of the following compensation proposals is most likely to be in the best interest of the company’s shareholders? A base salary of $500,000 plus perquisites worth $250,000 A base salary of $500,000 plus a stock option package for 250,000 shares that mature in six months A base salary of $500,000 plus a stock option package for 250,000 shares, with 20% of shares maturing at the end of each of the next five years Vision Tech is a software company based out of San Francisco. Its stockholders are mostly individual investors and there is relatively little institutional ownership. If several pension and mutual funds were to take large positions in Vision Tech’s stock, would direct shareholder intervention be more or less likely to motivate the firm’s management? Less likely More likely Vision Tech’s stock price is currently trading at $35 per share. The consensus among analysts is that the intrinsic value of Vision Tech’s stock is $26 per share. Is Vision Tech more or less likely to receive a hostile takeover bid? More likely Less likely
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Dividend Policy
A dividend is a part of the profit paid to the shareholder in an organization. The management of the organization has the right to decide the policy for giving a dividend from the earnings to the shareholder. However, an organization is not in the obligation to declare a dividend for the investor. Dividend policy differs from organization to organization. As the management has the only authority to decide dividend rate, dividend amount, and time of dividend payout by considering all other elements that create an impact on the payment of a dividend.
Stocks And Dividends
Stock or equities are generally sold and bought in the Stock Exchange or which is popularly known as the stock market. Stocks are issued in the Stock Exchange for the sole purpose of raising funds for the Corporation or the company itself. Now since an individual has purchased a portion of the Corporation or company, he or she may claim to be a part of the earnings or profit of the company.
Question
6. Stockholder and manager conflicts
Executive compensation packages often tie performance to bonus and incentive awards, supplemental retirement packages, perquisites, and severance pay, in order to encourage the management team to align their performance with organizational goals.
Which of the following compensation proposals is most likely to be in the best interest of the company’s shareholders?
A base salary of $500,000 plus perquisites worth $250,000
A base salary of $500,000 plus a stock option package for 250,000 shares that mature in six months
A base salary of $500,000 plus a stock option package for 250,000 shares, with 20% of shares maturing at the end of each of the next five years
Vision Tech is a software company based out of San Francisco. Its stockholders are mostly individual investors and there is relatively little institutional ownership. If several pension and mutual funds were to take large positions in Vision Tech’s stock, would direct shareholder intervention be more or less likely to motivate the firm’s management?
Less likely
More likely
Vision Tech’s stock price is currently trading at $35 per share. The consensus among analysts is that the intrinsic value of Vision Tech’s stock is $26 per share. Is Vision Tech more or less likely to receive a hostile takeover bid?
More likely
Less likely
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