Which of the following mechanisms would be most likely to help motivate managers

Question

Which of the following mechanisms would be most likely to help motivate managers to act in the best interests of shareholders? a. Take actions that reduce the possibility of a hostile takeover. b. Increase the proportion of executive compensation that comes from stock options and reduce the proportion that is paid as cash salaries. c. Elect a board of directors that allows managers greater freedom of action. d. Decrease the use of restrictive covenants in bond agreements. e. Eliminate a requirement that members of the board of directors have a substantial investment in the firm's stock. Which of the following mechanisms would be most likely to help motivate managers to act in the best interests of shareholders? a. Take actions that reduce the possibility of a hostile takeover. b. Increase the proportion of executive compensation that comes from stock options and reduce the proportion that is paid as cash salaries. c. Elect a board of directors that allows managers greater freedom of action. d. Decrease the use of restrictive covenants in bond agreements. e. Eliminate a requirement that members of the board of directors have a substantial investment in the firm's stock.

Explanation / Answer

Option B

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