Which of the following help convince managers to work in the best interest of the stockholders? Assume there are no golden parachutes.
I.compensation based on the value of the stock
II.stock option plans
III.threat of a company takeover
IV.threat of a proxy fight
A)I and II only
B)III and IV only
C)I, II, and III only
D)I, III, and IV only
E)I, II, III, and IV

Question

Quizplus · Accepted Answer

Compensation based on the value of the stock (I) and stock option plans (II) align managers' financial interests with those of the stockholders, encouraging them to work towards increasing the stock value. The threat of a company takeover (III) and a proxy fight (IV) can motivate managers to perform well to avoid losing their positions, thus acting in the best interest of the stockholders.

Which of the Following Help Convince Managers to Work in the Best