Lyons board of directors is currently working on developing a compensation plan for the CEO in order to minimize the effects of principal-agent problem. The boards goal is to design the compensation plan in a way to encourage the CEO to adopt a risk-taking attitude that could help the firm generate higher returns in the long term. According to the finalized incentive plan, an important part of the CEO compensation is directly linked to the firm's performance four years in the future. Lyons has recently begun searching for a new CEO. Which of the following statements is true?

Select one:

a. Investors with largest stockholdings might not agree with the board on this incentive plan and threaten to sell their stocks.

b. This plan can attract many candidates for the CEO position.

c. The incentive plan can encourage the CEO to reduce investments in R&D in order to enhance Lyons long-term profitability.

d. Lyons will likely need to provide higher base salary to the CEO in order to adjust for the increased personal risk taken by the CEO.