Question 1

Agency problems refer to a conflict of interest between a companys management and the stockholders. Which one of the following is the least act to help improve managers to work in the best interest of the stockholders?

A. Increasing the percentage of the independent directors in the board.

B. An increase in the flat salaries for the companys C-suite (top senior executives)

C. Executives and directors' compensation are granted based on the market value of the stock.

D. A threat of a corporate takeover by a major competitor.