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? O A base salary of $500,000 plus a stock option package for 250,000 shares that mature in six months O A base salary of $500,000 plus perquisites worth $250,000 O 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 institutional investors and there is relatively little individual ownership. If these institutions dilute their positions and sell off their stake in Vision Tech's stock to several individual investors, would direct shareholder intervention be more or less likely to motivate the firm's management? O Less likely O More likely Vision Tech's stock price is currently trading at $41 per share. The consensus among analysts is that the intrinsic value of Vision Tech's stock is $33 per share. Is Vision Tech more or less likely to receive a hostile takeover bid? O More likely O 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? O A base salary of $500,000 plus a stock option package for 250,000 shares that mature in six months O A base salary of $500,000 plus perquisites worth $250,000 O 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 institutional investors and there is relatively little individual ownership. If these institutions dilute their positions and sell off their stake in Vision Tech's stock to several individual investors, would direct shareholder intervention be more or less likely to motivate the firm's management? O Less likely O More likely Vision Tech's stock price is currently trading at $41 per share. The consensus among analysts is that the intrinsic value of Vision Tech's stock is $33 per share. Is Vision Tech more or less likely to receive a hostile takeover bid? O More likely O Less likely
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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?
O A base salary of $500,000 plus a stock option package for 250,000 shares that mature in six months
O 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, 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 institutional investors and there is relatively little individual
ownership. If these institutions dilute their positions and sell off their stake in Vision Tech's stock to several individual investors, would direct
shareholder intervention be more or less likely to motivate the firm's management?
O Less likely
O More likely
Vision Tech's stock price is currently trading at $41 per share. The consensus among analysts is that the intrinsic value of Vision Tech's stock is $33
per share. Is Vision Tech more or less likely to receive a hostile takeover bid?
O More likely
O Less likely
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