Which of the following compensation methods is NOT likely to reduce agency costs between stockholders and managers?
A) Stock compensation-giving the CEO stock in the company as part of her salary.
B) A golden parachute-a guaranteed large lump-sum payment in the event that the CEO is fired.
C) A higher salary than that of other CEOs in similar companies.
D) Performance bonuses-a higher bonus if the company's cash flows are higher then expected.
Correct Answer:
Verified
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