Answer & Explanation: There are several mechanisms that can be implemented to avoid excessive executive compensation: 1. Implementing a cap on executive pay: Setting a maximum limit on the amount of compensation that executives can receive can help prevent excessive payouts. 2. Linking executive pay to performance: Tying executive compensation to the company's performance, such as profits or stock price, can align their interests with those of shareholders and discourage excessive pay. 3. Increasing transparency: Requiring companies to disclose detailed information about executive compensation packages can help shareholders and stakeholders better understand how much executives are being paid and whether it is justified. 4. Strengthening shareholder rights: Empowering shareholders by giving them more say in determining executive pay through voting rights or say-on-pay policies can help ensure that compensation is reasonable and aligned with company performance. 5. Introducing clawback provisions: Including clawback provisions in employment contracts allows companies to recover bonuses or other forms of compensation if it is later discovered that they were based on inaccurate financial statements or unethical behavior. 6. Enhancing board oversight: Strengthening the independence and expertise of board members responsible for setting executive pay can help ensure that decisions are made in the best interest of the company and its stakeholders rather than benefiting individual executives excessively. By implementing these mechanisms, companies can promote fairness, accountability, and alignment between executives' interests and those of shareholders while avoiding excessive executive compensation.