CFAI PM Mock Q21

Can someone explain the correct answer for this to me? Why is management not responsible for P/L from FX? They have the option of putting a hedging program in place. If the business generates a large portion of international sales, and there is a significant FX movement, why is management not responsible for not having hedges put in place?

Which of he following is the most appropriate use of Berg’s reminder about the US versus euro exchange rate in 2013? Peterson should use the information:

Correct answer: C) when evaluating management’s historical performance.

CFA explanation:

Analysts should consider the foreign currency effect on sales growth for evaluating management’s historical performance. Foreign currency fluctuations are out of management’s control so management should not be held accountable for it when evaluating their performance.

Think the other way around: FX strengthens revenues go up and compensation is somewhat tied to revenues (hypothetical concept here). Why should management benefit from something that is out of their power?

And if you don’t get that…live with the CFAIs interpretation. It’s just for a couple more days.