Which of the following would be most likely to align the interests of managers and shareholders?
A)Fixed but high salaries
B)Large bonuses
C)Stock options
D)None of the above

Question

Quizplus · Accepted Answer

Stock options align the interests of managers and shareholders by giving managers a personal stake in the company's success as the value of stock options increases with the company's performance. This gives managers an incentive to make decisions that increase the company's stock value, which benefits both managers and shareholders. Fixed but high salaries and large bonuses do not necessarily tie managers' compensation to the company's performance, and may create conflicts of interest between managers and shareholders.

Which of the Following Would Be Most Likely to Align