What are the ceos and shareholders

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When an executive uses company assets to underwrite personal loans, the agency problem occurs as the company takes on debts to provide its executives with higher incomes. In 2001, WorldCom CEO Bernard Ebbers took out over $400 million in loans from the company at the favorable interest rate of 2.15%. WorldCom did not report the amount on its executive compensation tables in its annual report. Details of the loans did not come out until the company's accounting scandal hit the news late that year.

In your essay, explain what justified Mr Ebbers to take out the loans from his company? How this example was considered as a conflict of interests. Was the compensation scheme in the best interest of shareholders'? Explain the justification of board of directos to approve these loans to Mr Ebbers and other members. What are the CEOs and shareholders? What alternatives and solutions would you suggest to solve this ethical dilemma?

Reference no: EM131043951

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