ACCA · Question 1 · Financial Management Environment
Section A
NexusDAO is a decentralized autonomous organization transitioning into a formalized corporate structure to attract institutional investors. The founders are concerned about the classic 'agency problem' arising once external shareholders provide capital.
Which of the following mechanisms is MOST likely to align the interests of the new external shareholders with the executive directors of NexusDAO?
Answer options:
Increasing the proportion of fixed salary in the directors' remuneration packages.
Linking executive remuneration to long-term total shareholder return (TSR).
Appointing executive directors to the remuneration committee.
Setting performance targets based solely on short-term earnings per share (EPS).
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