Which one of the following is least apt to help convince managers to work in the best interest of the stockholders?
A)Threat of a takeover of the firm by unsatisfied stockholders
B)Implementation of a stock option plan
C)Salary raises based on length of service
D)Management compensation tied to the market value of the firm's stock
E)Threat of a proxy fight

Question

Quizplus · Accepted Answer

Salary raises based on length of service are a form of compensation that has no direct link to the performance of the company or the interests of the stockholders. Therefore, it is least likely to motivate managers to act in the best interest of the shareholders. The other options, such as the threat of a takeover, the implementation of a stock option plan, management compensation tied to the market value of the firm's stock, and the threat of a proxy fight, are all more likely to incentivize managers to prioritize the interests of the stockholders.

Which One of the Following Is Least Apt to Help