Question

What are some actions that stockholders can take to ensure that managements and stockholders interest are aligned

Answer 1

Following can be major actions that the stockholders can take to ensure that managements and stockholders interest are aligned:

1) Compensate the management sufficiently and tie their variable pay / bonus to the stock performance in the long term

2) Provide ESOPs (Employee stock options) so that management is also a co-owner of the company. Linking ESOPs and structuring them so that the stocks long term performance is associated directly with the compensation of the Management

3) Select / replace the Management team (through the board) such that the stock holder's interests are protected and aligned