Question

Over the past year, board members have come to believe that Lamar is making decisions that might be profitable in the short run but may have negative consequences in the long run. While investors enjoy the short term payoffs of Lamar's decisions, they also want him to make decisions that ensure they receive returns on their investment well into the future. Which of the following is a possible solution to this problem? A. Offer Lamar large bonuses based on quarterly profits.B. Do nothing and hope that he begins to make better decisions.C. Offer stock in the company as a large portion of Lamar's compensation.

Answer 1

Answer:

C. Offer stock in the company as a large portion of Lamar's compensation.

Explanation:

Stock is the term used to describe a piece of capital generated by the company, that is, a piece of profits. If the company is going through a good period, the stock will provide a lot of money to those who own it, on the other hand, if the company goes through a bad period the stock will provide little or no money to the owner of the stock.

For stoock to be a benefit to those who own it, it is important that the company goes through long periods of good productive and profitable processes.

As the Lamar company wants to encourage you to make increasingly profitable decisions and guarantee good results for the company in the short, medium and long term, this company could offer Lamar company stocks as a large part of the remuneration of its remuneration. If the company is bad, these stocks will generate a loss to Lamar, for that reason, he will make increasingly rational and correct decisions.