Methods to encourage managers to act in shareholders' best interest include
I.Threat of takeover
II.Proxy fights for control of the Board of Directors
III.Tying managers' compensation to stock price performance

Question

Quizplus · Accepted Answer

All three methods can encourage managers to act in shareholders' best interest. The threat of takeover and proxy fights can pressure the management to take actions that would improve the company's performance, while tying managers' compensation to stock price performance incentivizes them to increase the company's share value. Together, these methods can provide a powerful mechanism to align management's interests with shareholders' interests.

Methods to Encourage Managers to Act in Shareholders' Best Interest