By designing compensation plans with performance bonuses, share-based compensation and share options corporate boards are attempting to make the pay-off function for managers look similar to the pay-off function for shareholders.

Question

Quizplus · Accepted Answer

By incorporating performance bonuses, share-based compensation, and share options into compensation plans, corporate boards aim to align the interests of managers and shareholders by making their pay-offs similar. This is done to encourage managers to make decisions that will increase the value of the company, thereby benefiting both the shareholders and themselves.

By Designing Compensation Plans with Performance Bonuses, Share-Based Compensation and Share