Which of the Following Statements Regarding Compensation Policies Is FALSE

Multiple Choice

Which of the following statements regarding compensation policies is FALSE?

A) Increasing the pay-for-performance sensitivity comes with the added benefit of reducing managers' risk.
B) Stock and option grants give managers a direct incentive to increase the stock price to make their stock or options as valuable as possible.
C) By tying compensation to performance,the shareholders effectively give the manager an ownership stake in the firm.
D) 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.