Incentive compatibility can be achieved mainly not by stock options but by outright grants of equity to managers as part of their compensation, with the restriction that such positions be held for periods that at least exceed the existing holding horizons of controlling shareholders.

ECONOMIST: No soft option

Motivated by the growing literature studying the effects of stock market mispricing on firm behaviour (see for example Stein 1996, Shleifer and Vishny 2003, and Baker 2009), we develop a simple framework for thinking about how stock market mispricing can offset agency costs and induce controlling shareholders to raise outside equity.

FORBES: Do Inefficient Stock Markets Drive Bad Corporate Governance?

These controlling families ought to be compensated for the additional costs they incur from being less diversified than other shareholders and because they invest more time in overseeing management, he contends.

ECONOMIST: Novartis's bid for Alcon