During the late 2000s, when large U.S. financial institutions were fai

QUESTION

During the late 2000s, when large U.S. financial institutions were failing and required support from taxpayers, their top executives received bonuses equal to many times the annual salary of the average U.S. worker.

Many Americans felt this was wrong because it broke which basic concept of incentives?
A) They must satisfy individual employee needs.
B) They must be measurable.
C) They must be perceived by the employee as fair and believable.
D) They must be linked to performance.
E) They must be agreed upon by the manager and employee.

ANSWER

Answer: D
Explanation: D) Incentives are intended to enhance employee productivity and performance, and bonuses are awarded for achieving specific performance objectives. If the companies were in danger of failing, it would seem the executives did not meet performance objectives.