Which of the following does NOT mitigate the principal-agent problem in corporate finance?
A. Electing the CEO as chairman of the board of directors.
B. The threat of hostile takeovers
C. The influence of large shareholders.
D. Increasing proportion of the CEO’s that comes from salary and decreasing the proportion that comes from stock options.
E. Tying managerial compensation to the firm’s long-term stock price
The answer is D. Increasing proportion of the CEO’s that comes from salary and decreasing the proportion that comes from stock options
By increasing the salary and decreasing stock options, CEO will loose the incentive to work in best interest or inlign with the goals of shareholders
Which of the following does NOT mitigate the principal-agent problem in corporate finance? A. Electing the CEO as chairman of the board of directors. B. The threat of hostile takeovers C. The influenc...