Question

Compensation for top executives (e.g., CEOs and CFOs) has become more variable over time. For example, recent data show that in large corporations only 20 percent of CFO pay is fixed and 80 percent is variable, based on companywide performance. Why do you believe this type of reward plan has been chosen for CFOs of large companies? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) Because top managers can have significant impacts throughout the entire business. unanswered Because this type of reward plan will encourage the CFOs to work in a more rational manner. unanswered Because companies do not have enough funds to pay them. unanswered Because large companies are willing to pay huge compensation to their CFO

Answer 1

Because :- CEOs & CFOs can have significant impacts throughout the entire business, & the type of reward plan will encourage the CFOs to work in a more rational manner.

Step-by-step explanation:

CEOs & CFOs are a part of upper level of management of an organisation. Effectiveness & Efficiency of their managerial skills is very crucial to management of company. So, to encourage proper management of companies by senior managers, they can be incentivised by mix of fixed & variable salary structure. The variable component of salary as per company performance under CEO or CFO, positively motivates them to improvise their performance, which subsequently improves company performance.