Final answer:
Compensation policies that include stock options and stock grants are likely to encourage a long-term horizon for managers as their gains are directly tied to the company's long-term stock performance.
Step-by-step explanation:
A long time horizon for managers is typically expected as a result of compensation policies that align the interests of the managers with those of the shareholders. The compensation policies that are likely to encourage managers to focus on long-term performance are c. Stock options and stock grants. These forms of compensation provide incentives for managers to increase the company's value over a longer period because the personal gains from these compensations are directly tied to the long-term performance of the company's stock. Stock options give managers the right to buy shares at a fixed price in the future, which motivates them to work towards increasing the stock's value. Stock grants, which are outright gifts of shares, align managers' interests with those of shareholders, as both will benefit from a rising share price. Conversely, cash bonuses and salaries are more closely related to short-term performance metrics and outcomes.