Which of the following actions would be likely to reduce potential conflicts of interest between stockholders and managers?   a. A firm's compensation system is changed so that managers receive larger cash salaries but fewer long-term options to buy stock.     b. The company changes the way executive stock options are handled, with all options vesting after 2 years rather than

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Which of the following actions would be likely to reduce potential conflicts of interest between stockholders and managers?
  a. A firm's compensation system is changed so that managers receive larger cash salaries but fewer long-term options to buy stock.  
  b. The company changes the way executive stock options are handled, with all options vesting after 2 years rather than having 20% of the options awarded vest every 2 years over a 10-year period.  
  c. The composition of the board of directors is changed from all inside directors to all outside directors, and the directors are compensated with stock rather than cash.  
  d. The company's outside auditing firm is given a lucrative year-by-year consulting contract with the company.  
  e. Congress passes a law that severely restricts hostile takeovers.
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