Which one of the following is least apt to convince managers to work in the best interest of the current stockholders?
A)Receiving a bonus based on company profits
B)Receiving stock options
C)Being threatened with a proxy fight
D)Receiving a bonus based on company size
E)Receiving company shares based on increases in share value

Question

Quizplus · Accepted Answer

A bonus based on company size does not necessarily correlate with working in the best interest of current stockholders. In fact, a manager may prioritize expanding the company at the expense of short-term profits or the current stockholders' interests to achieve a larger company size and thus qualify for the bonus. The other options, such as receiving a bonus based on company profits or stock options, directly tie the manager's incentives to the financial success of the company and the interests of the current stockholders. Being threatened with a proxy fight or receiving company shares based on increases in share value also aligns the manager's interests with the current stockholders, but these options may not be as effective in motivating managers compared to bonuses or stock options.

Which One of the Following Is Least Apt to Convince