At the Wedge Natural Co-op in Minneapolis, employees talked about how the long-time general manager had fired almost the entire staff when he took over because they did not show the work ethic he required. Thisreinforced the idea that, though it had grown out of the hippie culture of the 1970s, the food co-op was a serious business that delivered great customer service and made money for its member-owners.

Which of the following actions would be most likely to reduce potential conflicts of interest between stockholders and managers? a. change the corporation's formal documents to make it easier for outside investors to acquire a controlling interest in the firm through a hostile takeover. b. eliminate a requirement that members of the board of directors must hold a high percentage of their personal wealth in the firm's stock. c. for a firm that compensates managers with stock options, reduce the time before options are vested, i.e., the time before options can be exercised and the shares that are received can be sold. d. pay managers large cash salaries and give them no stock options. e. beef up the restrictive covenants in the firm's debt agreements.