Which of the following mechanisms would be most likely to helpmotivate managers

Question

Which of the following mechanisms would be most likely to helpmotivate managers to act in the best interest of shareholders?
      a. Decrease the use of restrictive covenantsin bond agreements.
       b. Take actions thatreduce the possibility of a hostile takeover.
       c. Have the board ofdirectors allow managers greater freedom of action.
       d. Increase theproportion of executive compensation that comes from stock optionsand reduce the proportion that is paid as cashsalaries.
       e. Eliminate arequirement that members of the board of directors have asubstantial investment in the firm’s stock.

Explanation / Answer

Answer is Option (e) Eliminate a requirement thatmembers of the board of directors have a substantial investment inthe firm's stock.

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