Which of these is the most effective way to encourage directors to make decisions that maximise the wealth of shareholders?
A)Make the directors shareholders in the firm.
B)Impose fines on directors who fail to met predetermined earnings performance levels.
C)Pay bonuses to the directors on the basis of the company's earnings performance.
D)Reduce the number of non- executive board members.

Question

Quizplus · Accepted Answer

Making directors shareholders aligns their interests with those of the shareholders, as they will directly benefit from decisions that increase shareholder wealth.

Which of These Is the Most Effective Way to Encourage