Which of the Following Actions Would Be Most Likely to Reduce

question 60

Multiple Choice

Which of the following actions would be most likely to reduce potential conflicts of interest between stockholders and managers?

• A) Pay managers large cash salaries and give them no stock options.
• B) Change the corporation's formal documents to make it easier for outside investors to acquire a controlling interest in the firm through a hostile takeover.
• C) Beef up the restrictive covenants in the firm's debt agreements.
• D) Eliminate a requirement that members of the board of directors must hold a high percentage of their personal wealth in the firm's stock.
• E) For a firm that compensates managers with stock options,reduce the time before options are vested,i.e. ,the time before options can be exercised and the shares that are received can be sold.

---

Definitions:

Bipolar Disorder

A mental condition marked by extreme mood swings between manic highs and depressive lows.

Depakote

A medication primarily used to treat seizure disorders, bipolar disorder, and to prevent migraine headaches.

Epilepsy

A neurological disorder characterized by recurrent, unprovoked seizures due to abnormal brain activity.

Manic Episodes

Periods of abnormally elevated mood, energy, and activity levels, often associated with bipolar disorder, characterized by an excessively good mood, increased talkativeness, and hyperactivity.