Which of the following is a method to align management and stockholder interests?

Stock options are a method used to align the interests of management and stockholders by tying the potential rewards of management directly to the performance of the company’s stock. When management is granted stock options, they have the opportunity to purchase shares at a predetermined price. If the company’s stock performs well and the market price exceeds the option price, management can exercise their options, resulting in financial gain.

This mechanism creates a direct incentive for management to act in ways that will increase the stock price, thus benefiting stockholders. The desire to see the company's stock value rise encourages management to implement strategies that will lead to long-term growth and profitability, aligning their objectives with those of investors.

In contrast, other methods listed do not inherently create this alignment. Promotion, while important for employee morale and growth, does not directly tie management incentives to stockholder value. Liquidation involves selling off the company’s assets and is typically a last resort, with little to do regarding aligning interests. Debt financing can introduce pressures on management regarding cash flow and profitability but does not directly align their financial incentives with stockholder interests like stock options do.