Which of the following does not persuade managers to work in the best interest of the stockholders?
A) Compensation based on the value of the stock.
B) Stock option plans.
C) Threat of a company takeover.
D) Threat of a proxy ﬁght.
E) Purely cash compensation package.

Question

Quizplus · Accepted Answer

A purely cash compensation package does not provide any direct incentive for managers to work in the best interest of the stockholders. The other options all tie managerial compensation to the performance of the stock, which encourages managers to focus on maximizing shareholder value.

Which of the Following Does Not Persuade Managers to Work