Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
4th Edition
ISBN: 9780134408897
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Question
Chapter 29, Problem 9P
Summary Introduction
To discuss: The pros and cons for raising the options granted to the Chief Executive officers (CEOs).
Introduction:
The company’s compensation policies provide the managers an ownership stake by taking the grants of stock or stock options to the executive of the company. These grants provide the direct incentive to managers for raising the stock price mainly to make the company’s stock or stock option more valuable. As a result, the stock and option grants naturally tie managerial wealth to the wealth of shareholders.
The monetary and non-monetary benefits paid to the employs by the employer for the work done are termed as compensation.
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Chapter 29 Solutions
Corporate Finance Plus MyLab Finance with Pearson eText -- Access Card Package (4th Edition) (Berk, DeMarzo & Harford, The Corporate Finance Series)
Ch. 29.1 - Prob. 1CCCh. 29.1 - Prob. 2CCCh. 29.2 - Prob. 1CCCh. 29.2 - Prob. 2CCCh. 29.3 - What is the main reason for tying managers...Ch. 29.3 - Prob. 2CCCh. 29.4 - Prob. 1CCCh. 29.4 - Prob. 2CCCh. 29.5 - Prob. 1CCCh. 29.5 - Prob. 2CC
Ch. 29.5 - Prob. 3CCCh. 29.6 - Prob. 1CCCh. 29.6 - Prob. 2CCCh. 29 - Prob. 1PCh. 29 - Prob. 2PCh. 29 - Prob. 3PCh. 29 - Prob. 4PCh. 29 - Prob. 5PCh. 29 - Prob. 6PCh. 29 - Prob. 7PCh. 29 - Prob. 8PCh. 29 - Prob. 9PCh. 29 - Prob. 10PCh. 29 - Prob. 11PCh. 29 - Prob. 12PCh. 29 - Prob. 13PCh. 29 - Prob. 14PCh. 29 - Prob. 15PCh. 29 - Prob. 16PCh. 29 - Prob. 17PCh. 29 - Prob. 18PCh. 29 - Prob. 19PCh. 29 - Prob. 20P
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Similar questions
- Explain the Threat and Opportunity of Shareholder Activism ? Explain the Effect of Executive Compensation on the Cost of Equity? Why Corporate Governance Is Important to Investors?arrow_forwardHow can you empirically assess the relation between a firm’s leverage with CEO ownership and board structure?arrow_forwardWhy might one expect managers to act in shareholders' interests? Give some reasons.arrow_forward
- What are the advantages of bringing IPO into company?arrow_forwardIf a company’s board of directors wants management to maximize shareholder wealth, should the CEO’s compensation be set as a fixed dollar amount, or should the compensation depend on how well the firm performs? If it is to be based on performance, how should performance is measured? Would it be easier to measure performance by the growth rate in reported profits or the growth rate in the stock’s intrinsic value? Which would be the better performance measure? Why?arrow_forwardIf a company’s board of directors wants management to maximize shareholder’s wealth, should the CEO’s compensation be set as a fixed amount, or should the compensation depend on how well the firm performs? If it is based on performance, how should performance be measured? Would it be easier to measure performance by the growth rate in reported profits or the growth rate in the stock’s intrinsic value? Which would be the better performance measure? Why?arrow_forward
- Why should a financial decision maker such as a corporate treasurer or CFO be concerned with market efficiency?arrow_forwardIs maximizing shareholder value inconsistent with being socially responsible?Explain.arrow_forwardIf management’s goal is to maximize shareholderwealth, should it focus on the regular IRR or theMIRR? Explain your answer.arrow_forward
- A good way to align the incentives of a CEO with those of shareholders is to make his pay directly related to earnings (or cash flows) per share (EPS), since an increase in earnings always leads to an increase in shareholder value. True or Falsearrow_forwardwhy is it essential for a corporate manager to balance the interests of society and shareholders?arrow_forward
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