In the$$ past, executive compensation was largely through a fixed salary per year. Over time$$ however, a higher and higher proportion of CEO compensation has been through stock or stock$$ options, so that manager compensation is more closely tied to the$$ company's stock price. This also means that the overall pay package is$$ riskier, compared to a guaranteed total.

Which of the following are correct regarding this trend towards manager compensation being more closely tied to the stock$$ price? Choose all that apply.

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Part $1$

$($Select all the choices that $$apply$.)$

A$.$

This shift in how managers are compensated will tend to decrease the agency problem between stockholders and$$ managers, by giving managers better incentives.

B$.$

In a$$ competitve, relatively efficient market for$$ managers, we would expect average CEO pay to have stayed the same over$$ time, because managers were already making a lot of money.

C$.$

In a$$ competitve, relatively efficient market for$$ managers, we would expect average CEO pay to have gone up over time to compensate for the higher$$ risk, because people are risk averse.

D$.$

This shift in how managers are compensated will tend to create an agency problem between stockholders and$$ managers, by unfairly compensating managers at the expense of workers and other stakeholders.