Which of the following does not assist in ensuring managers act in the best interest of owners?
A) A compensation package for managers that ties their salary to the firm's share price.
B) Managers are promoted only if the firm prospers.
C) The threat that if the firm does poorly, shareholders will use a proxy fight to replace the existing management.
D) There is a high degree of likelihood the firm will become a takeover candidate if the firm performs poorly.
E) A compensation package for managers that is all cash with no ties to performance.

Question

Quizplus · Accepted Answer

E) A compensation package for managers that is all cash with no ties to performance does not incentivize managers to act in the best interest of the owners, as it does not align their financial interests with the performance of the company.

Which of the Following Does Not Assist in Ensuring Managers