Incentive Contracts Managerial Compensation Plans Theory of Executive Compensation
50
net income and share price
What are the two performance measures
50
short-term
mid-term
long-term
Name two of the three incentive components
50
sensitivity of net income and share price
Two performance measures of determining managers overall performance
100
to motivate manager performance and inform investors
What is the role of net income
100
by using multiple performance measures instead of only one
What increases the efficiency of compensation contract
100
using current value model
full disclosure
persistent earnings
different ways to increase sensitivity of net income
150
when lower level managers detect and report shirking of the managers above them to get ahead
What is internal monitoring
150
it depends on current year performance and it creates incentive to maximize the current year's levels of earnings and ROE
What does short-term and mid-term incentive award depend on and what incentive does it create
150
it influence the length of the manager's decision horizon
What influence does coexistence have on the compensation plan






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