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ABC corporation suffers a declining of performance recently and shareholders are concerned that the executives might not do their best to run the company. Therefore,

ABC corporation suffers a declining of performance recently and shareholders are concerned that the executives might not do their best to run the company. Therefore, the company consults its board directors and people put up the following suggestions for consideration:

  • Increase the percentage of executive compensation that comes in the form of cash and reduce the percentage coming from long-term stock options as managers prefer stable payment.
  • Consider to issue shares to institutional investors such as mutual funds, pension funds, and hedge funds to increase the institutional ownership from 30% to 60%.
  • Consider to hire more independent directors to sit on board.
  • Change 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.
  • To grant the company's outside auditing firm a lucrative year-by-year consulting contract with the company.

Please go through each suggestion and briefly state your thoughts on how the suggestion could possibly solve the conflicts between shareholders and the executives, and conclude your recommendations to the shareholders of ABC corporation.

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