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Entrenched Management and Compensation

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What activities should shareholders look for in order to determine if an entrenched management is taking actions that would harm shareholders? Also, how would these actions harm the stockholders? Finally, how should upper management be compensated to make sure they do the right things?

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The solution discusses entrenched management and compensation including harm to shareholders.

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Entrenched Management and Compensation:

Entrenched management and corporate governance go hand in hand whereby they both add within companies an essential vision, processes, and structures which are going to play an important part in the making of decisions which ensures sustainability within the companies that lasts for a long period of time. Companies which are profitable and at the same time achieve a social, environmental, and economic value for the society are required at this time at higher levels. Management entrenchment is defined as the ability of the management to provide insulation over the themselves from actions which a shareholder or a stakeholder takes as a reactionary measure in response to the management's actions for example; managers can become entrenched with lower ownership percentage in the United States than elsewhere as a result of the ownership dilution (corporate governance, 2009; Bubbs, 2003).

There are several activities which shareholders look for so as to determine if ...

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