XYZ Pharmaceuticals Recently Announced That the Clinical Trials for a Cancer

Multiple Choice

XYZ Pharmaceuticals recently announced that the clinical trials for a cancer drug failed to cure the illness.This announcement led to a dramatic decrease in the stock value of the company.The company hired a new CEO two years ago when the clinical trials for this drug had already initiated.Which one of the following is true about the compensation of the CEO of XYZ Pharmaceuticals?

A) The CEO should receive lower compensation since shareholder returns have been declining.
B) The CEO was not involved in the decision of the failed initiative;therefore he/she should not receive lower compensation.
C) There is no simple answer as to what should be the compensation level of this CEO.
D) The compensation of this CEO depends only on pretax profit margins,so we need more information to decide on the compensation of this CEO.