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Which of the following best explains why a board of directors may grant stock options as part of a compensation package?
A) To reduce the transferability of stocks between stockholders
B) To bring about a separation of CEO/chair duality
C) To align incentives between shareholders and management
D) To change the liability of shareholders from limited to unlimited

Respuesta :

Answer:

C) To align incentives between shareholders and management

Explanation:

Stock options are usually offered to managers and board members to reduce agency conflicts and align the goals of the mangers with that of the shareholders.

By granting stock options to board directors, it would be in the best interest of the directors to see the value of their stocks increase. So, they would take decisions that would enhance the appreciation of stocks.

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