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:

Production

The process of creating goods or services by combining various inputs like labor, materials, and technology.

Price L

A specific notation used to denote a certain price level in economic models or discussions.

Factor Prices

The costs associated with the inputs used in production, such as labor wages and capital rental rates.

Production Function

An economic model that describes how inputs are transformed into outputs by a firm.