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Which of the following statements is FALSE?
OA. Increasing the pay-for-performance sensitivity comes with the added benefit of reducing manager's risk.
OB. By tying compensation to performance, the shareholders effectively give the manager an ownership stake in the firm.
OC. Stock and option grants give managers a direct incentive to increase the stock price to make their stock or options as
valuable as possible.
OD. During the 1990s, most companies adopted compensation policies that more directly gave managers an ownership
stake by including grants of stock or stock options to executives.
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Answer :

GinnyAnswer

Final answer:

The false statement is B. Stock options and grants incentivize performance but do not equate to ownership for managers.


Explanation:

False Statement: B. By tying compensation to performance, the shareholders effectively give the manager an ownership stake in the firm.

Explanation: While tying compensation to performance aligns incentives, it doesn't equate to giving actual ownership. Stock options and grants provide incentives, but ownership remains with shareholders.


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