Fred is the CEO of a publicly listed multinational enterprise in the electronics and appliances manufacturing sector. The firm's shareholders include pension funds, banks, insurance firms, and other large companies - that together control 90% of the firm's equity. The Board of Directors consists of 6 Nominee Directors that represent these large corporations (one from each firm) and 2 Directors that represent the balance 10% of Shareholders (mostly High Net Worth Individuals). Fred has managed to forge excellent working relationships with 5 of the 6 Directors that represent the large firms. Those Directors have practiced a "hands-off" policy towards Fred- and left him to steer the firm's Strategy, and Future Direction. Over the past 5 years - Fred has grown the firm by acquiring 4 smaller competitors, and enhancing the market share and revenues. For each acquisition, Fred landed a handsome bonus and stock options. His salary and benefits have also grown remarkably during those 5 years - in recognition of his performance. However, despite growth through acquisition, the firm's share price has continued to decline, and the Individual Shareholders have made a lot of noise, questioning Fred's competency at Creating and Enhancing Shareholder Value. Unperturbed, Fred knows that his friends in the Board subscribe to his message of "wait for the long term" and Fred carries on focusing on his personal goals and ambitions. a) What theory best describes Fred's actions and attitudes towards the Shareholders of the firm? Explain your answer in detail. b) How can this firm develop incentives to harmonize efforts of the CEO (like Fred) with those of Shareholders?