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

Quizplus · Accepted Answer

Compensation based on the value of equity and share option plans directly align the interest of managers and shareholders because if the company performs well, the equity value will increase, and this will benefit the shareholders as well as the managers. Additionally, the threat of a proxy fight ensures that managers are held accountable for their actions and are constantly trying to increase shareholder value. Finally, the threat of conversion to a partnership gives shareholders the power to remove managers who are not acting in their best interest. Hence, all 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