Asked by Isaiah Drayton on Jul 18, 2024

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Why do critics argue that high compensation for boards of directors is a bad thing?

A) It is too expensive for the organization.
B) It could cause conflicts of interest between the directors and the organization.
C) It is not fair to poorly compensated employees.
D) High pay will render the board less complacent.
E) Board of director compensation is negatively related to corporate growth.

Compensation

The total of all rewards provided to employees in return for their services, including salary, benefits, bonuses, and other forms of payment.

Conflicts of Interest

Situations where a person or organization could potentially benefit personally from their actions or influence, which might compete with their duties or the interests of their employer or clients.

Corporate Growth

The expansion of a company's market share, revenue, size, or production capabilities, often seen as a measure of success.

  • Understand the critical debates surrounding high compensation for board of directors.
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AR
aneesa rahimJul 19, 2024
Final Answer :
B
Explanation :
Critics argue that high compensation for boards of directors could cause conflicts of interest between the directors and the organization. If directors are being compensated at a very high rate, they may be more focused on satisfying their own interests rather than those of the organization. This can lead to poor decision-making and ultimately hurt the organization. Additionally, high board compensation can be seen as unfair to other employees or stakeholders who may be struggling financially.