CEOs naming friends to the board of directors and paying them more than the norm is an example of the
A) agency problem.
B) preemptive right.
C) majority voting feature.
D) proxy fights.

Question

Quizplus · Accepted Answer

This is an example of the agency problem where the CEO, acting as an agent, may make decisions that benefit themselves and their friends rather than maximizing shareholder value. By naming friends to the board and paying them more than the norm, the CEO may be prioritizing their personal relationships over the interests of the company and its shareholders. This can lead to conflicts of interest and potentially harm the company's performance.

CEOs Naming Friends to the Board of Directors and Paying