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Compensation risk affects how a manager operates a firm. From a shareholder's perspective, which of the following is most effective at controlling compensation risk? Compensation

image text in transcribed Compensation risk affects how a manager operates a firm. From a shareholder's perspective, which of the following is most effective at controlling compensation risk? Compensation based primarily on employee stock options Net income-based compensation Relative performance evaluation Allowing the manager to sell his/her firm shares and options, and invest the proceeds in risk-free assets and/or a diversified portfolio

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