Clare, the CEO of Femica Inc., reports to the board of directors appointed by the shareholders of Femica. Based on shareholder suggestions, the board ties Clare's compensation to the performance of Femica. Due to this pressure, Clare begins devoting extra time to projects and undertakes other activities to ensure that she has job security and that she receives adequate compensation. This conflict between Clare's interests and the board's interests best illustrates a(n)
A. shareholder capitalism scenario.
B. inside director-outside director conflict.
C. fiduciary responsibility oversight.
D. principal-agent problem.
Answer: principal-agent problem