The best method for reducing the agency problem for a large public corporation is stock-based compensation.
<h3>What is stock-based compensation?</h3>
The total success of the company should decide the manager's compensation. If they own shares in the company, managers must avoid the conflicts of interest that come with principal-agent relationships. Implementing stock-based compensation should therefore be the greatest solution to the agency conundrum.
Stock-based compensation, also known as share-based compensation or equity compensation, is a way to give a firm's employees, executives, and directors ownership in the company.
Thus, it is stock-based compensation.
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