Question
How do RSUs differ from stock options as a governance tool?
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Answer
RSUs vest over time, encouraging retention and long-term focus.
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Question
How does the board of directors help mitigate the shareholder-management principal-agent conflict?
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Answer
It oversees management, hires/fires the CEO, and approves strategy.
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Question
Which governance mechanism is most directly aimed at reducing fraud and misreporting risk?
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Answer
The audit committee.
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Question
How does a compensation committee address the shareholder-management conflict?
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Answer
It designs executive pay to align management with shareholders.
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