Question

In addition to an annual base salary of 1.3 million USD and 10.4 million USD in stock compensation and bonuses, Heather Bresch, CEO of Mylan Pharmaceuticals, also received 6.4 million USD in other compensation in 2015. This included 19,200 USD for the use of a company-provided automobile and 310,000 USD in personal use of the company jet. Which of the following statements is true regarding this situation?a.Top level managers always act in the shareholder interest.
b.Shareholders favor diversification.
c.Top level managers may pursue their own interests over that of the company.
d.Executives favor diversification.

Answer 1

Answer:

The correct answer is C,top level managers may pursue their own interests over that of the company.

Explanation:

Company executives tends to pursue personal interests at the expense of the shareholders who are the bona fide owners of the business.

This selfish interest pursuance is playing out because the CEO's remuneration packages cannot be said to be justifiable in that they are not linked to any performance metrics such as the level  of profits posted.

The major concern is on the stock compensation and bonuses since the best  practice requires that benefits should be linked to the company's underlying performance,that way the company's performance is boosted and would be seen as a way win-win situation for both shareholders and the management team.

Answer 2

Answer:

Top level managers may pursue their own interests over that of the company.

Explanation:

This is because the shareholder’s or the Company’s wealth has to be used only for the benefits of the shareholders in common or to achieve the Organizational goals. It is not a partnership firm or a sole proprietorship business wherein the wealth of the Entity belongs personally to the owners of the business. In corporate, the employees, including the Top level managers cannot use the wealth thus for the personal purpose at all.