Incentive-based compensation plans should offer rewards to management for performance that creates increased shareholder value to help avoid management's incentive to manipulate earnings per share.

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Incentive-based compensation plans that offer rewards based on the creation of increased shareholder value can help mitigate the incentive for management to manipulate earnings per share, as their focus is on overall company performance rather than just short-term results.

Incentive-Based Compensation Plans Should Offer Rewards to Management for Performance