Chapter 15 Principal Agent Issues and Managerial Compensation Page -593
STRATEGY SESSION:Getting the Board to Focus on the Long Term
Discussion Questions
- Do you think the change in compensation will encourage board members to focus on long-term growth? Why or why not?
- Many, if not all, incentive-based compensation plans provide opportunities for managers to "game the system" by altering the timing of revenues and costs in ways that do not increase value. Does this mean that such systems should be abandoned? Why or why not?