Probably the Least Effective Means of Aligning Management Goals with Shareholder

question 56

Multiple Choice

Probably the least effective means of aligning management goals with shareholder interests is:

• A)the potential for a proxy fight by an unhappy segment of shareholders.
• B)basing all management bonuses on performance goals.
• C)holding management salaries steady while increasing stock option grants.
• D)the threat of a takeover of the firm.
• E)automatically increasing management salaries on an annual basis.

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Definitions:

Conservation

A principle in cognitive development where a child recognizes that quantity does not change with physical rearrangement.

Theory of Mind

The skill to recognize and assign mental states such as beliefs, intentions, desires, imaginings, and understanding to oneself and others, while also comprehending that others possess their own unique beliefs, desires, and intentions that may not align with one's personal views.

Object Permanence

The awareness that things still exist even if they are not currently being perceived through sight, hearing, touch, smell, or any other sensory method.

Egocentrism

A cognitive bias where an individual is unable to see a situation from another person's point of view.