Corporate executives are normally remunerated with a package that consists of a combination of one or more of the following:
a. Salary
b. Perks such as company cars, expense accounts, nice offices, and club memberships
c. Bonuses based on net income
d. Bonuses based on gross sales
e. Stock option plans
Required:
Discuss the impact of each of the above items on the actions of executives. What would each item encourage the executive to achieve? Which of these actions might be beneficial to the company? Which might be harmful? If you were designing a remuneration package for executives running a company you owned, what would you include? Explain your choices.