Which of the Following Is the Best Way to Prevent

question 27

Multiple Choice

Which of the following is the best way to prevent an agency problem between shareholders and managers?

• A) Maintain a proportional relationship between a manager's bonus and the number of employees in the firm.
• B) Compensate managers to a significant degree with shares of stock in their firm.
• C) Reward managers if they keep costs below the budgeted amount.
• D) Pay managers a bonus if their division exceeds its targeted market share.
• E) Pay managers a bonus if their division exceeds its quarterly sales target.