Question

Which of the following is NOT an effective means of aligning management goals with shareholder interests?A. Employee stock optionsB. Threat of a takeoverC. Management bonuses tied to performance goalsD. Compensating managers with salaries significantly higher than their peers

Answer 1

Answer:

D. Compensating managers with salaries significantly higher than their peers

Explanation:

• As the shareholder's interest means all the rights and duties enjoyed by them due to the legal status. Like in the control system and the corporate positions. As they are apart of the stocks which are also called equity. Their rewards come in the form of stock valuations.

• They have the right to collect and to inspect the company's books and records. They have the ability to sue the company for misdeeds of there directors and also have the right to attend annual meetings, either in a person or through the conference calls.