The Board of Directors of Beeline, Inc. has decided to base the salary of its financial manager entirely upon the market share of the firm. Accordingly,
A) The firm may incur some agency costs since the manager will be focused on the market share of the firm rather than acting to maximize earnings.
B) The financial manager will always act in the best interest of the shareholders since all agency costs have been eliminated through salary incentives.
C) This arrangement may be unnecessary, since the goal of the firm is to maximize earnings for shareholders, and that is most likely accomplished through larger market share.
D) The manager may not act to maximize the current value of the firm's stock, resulting in agency costs for the firm's stockholders.
E) The firm will incur some agency costs if the manager acts to maximize market share.

Question

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The Answer of The Board of Directors of Beeline, Inc. has decided to base the salary of its financial manager entirely upon the market share of the firm. Accordingly,
A) The firm may incur some agency costs since the manager will be focused on the market share of the firm rather than acting to maximize earnings.
B) The financial manager will always act in the best interest of the shareholders since all agency costs have been eliminated through salary incentives.
C) This arrangement may be unnecessary, since the goal of the firm is to maximize earnings for shareholders, and that is most likely accomplished through larger market share.
D) The manager may not act to maximize the current value of the firm's stock, resulting in agency costs for the firm's stockholders.
E) The firm will incur some agency costs if the manager acts to maximize market share.