Business, 01.09.2020 21:01 ethangeibel93
Which of the following actions will help ease agency conflicts and better align managers’ objectives with the firm’s shareholder wealth?a. Pay the manager a large base salary with a huge stock option package that matures on a single date. b. Pay the manager a combination of salary and stock options (phased in over several years) that reward him or her for consistently increasing shareholder wealth. In addition to well-designed executive compensation packages, other motivational forces can align the interests of managers with those of their shareholders. Which of the following actions could be used to reduce the potential for these agency conflicts and ensure that the firm's managers will pursue the long-term wealth interests of their shareholders? a. Let the manager know that he or she will be fired if the company's stock does not reach a certain target by the end of the year. b. Let the manager know that a takeover is possible if he or she doesn't perform well.
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