which of the following mechanisms would be most likely to help motivate managers to act in the best…

which of the following mechanisms would be most likely to help motivate managers to act in the best interests of shareholders?\ndecrease the use of restrictive covenants in bond agreements.\ntake actions that reduce the possibility of a hostile takeover.\nelect a board of directors that allows managers greater freedom of action.\nincrease the proportion of executive compensation that comes from stock options and reduce the proportion that is paid as cash salaries.\neliminate a requirement that members of the board of directors have a substantial investment in the firms stock.

which of the following mechanisms would be most likely to help motivate managers to act in the best interests of shareholders?\ndecrease the use of restrictive covenants in bond agreements.\ntake actions that reduce the possibility of a hostile takeover.\nelect a board of directors that allows managers greater freedom of action.\nincrease the proportion of executive compensation that comes from stock options and reduce the proportion that is paid as cash salaries.\neliminate a requirement that members of the board of directors have a substantial investment in the firms stock.

Answer

Brief Explanations:

Stock - based compensation aligns managers' interests with shareholders'. When managers have stock options, their financial gain is tied to the company's stock performance, which reflects shareholders' interests. Restrictive covenants in bond agreements protect bondholders, not necessarily motivate managers for shareholders. Reducing hostile - takeover risk may make managers complacent. Giving managers more freedom without proper incentives may not benefit shareholders. Eliminating board - member investment requirements weakens their alignment with shareholders.

Answer:

Increase the proportion of executive compensation that comes from stock options and reduce the proportion that is paid as cash salaries.