Methods to minimize agency problem include all EXCEPT
A) offer the managers an equity stake in the firm.
B) award the CEO stock options.
C) allow the CEO to purchase stock via an employee stock option plan.
D) allow the CEO to purchase bonds via an employee bond option plan.

Question

Quizplus · Accepted Answer

Offering managers equity stakes, awarding CEOs stock options, and allowing them to purchase stock via an employee stock option plan are all methods aimed at aligning the interests of the managers with those of the shareholders, thereby minimizing agency problems. However, allowing the CEO to purchase bonds via an employee bond option plan does not directly align the CEO's interests with those of the shareholders, as bonds are debt instruments and do not provide equity or ownership interests in the firm.

Methods to Minimize Agency Problem Include All EXCEPT