Which of the following help convince managers to work in the best interest of the shareholders?
I.compensation based on the value of the equity
II.share option plans
III.threat of a proxy ﬁght
IV.threat of conversion to a partnership

Question

Which of the following help convince managers to work in the best interest of the shareholders? 
I.compensation based on the value of the equity
II.share option plans
III.threat of a proxy ﬁght
IV.threat of conversion to a partnership

Quizplus · Accepted Answer

Compensation based on the value of the equity and share option plans align the interest of managers with the shareholders by tying their pay to the performance of the company's stock. The threat of a proxy fight also puts pressure on the managers to work in the best interest of shareholders as they may lose their positions if shareholders are unhappy with their performance. Threat of conversion to a partnership may also encourage managers to work towards the interests of the shareholders. Therefore, all of the given options help convince managers to work in the best interest of the shareholders.

Which of the Following Help Convince Managers to Work in the Best