. Executive remuneration can also be viewed as a part of agency problem because it can induce moral hazard and conflict of interest among managers.

(a) Describe how managers can increase their own compensation in a manipulative way.

(b) State the basic rule in the determination of the executive compensation.

(c) Based on your answer in (b), state the reality in the executive compensation in the corporate world nowadays.

(d) Diamond Company intends to improve their executive compensation. They appointed you, a corporate governance expert to give a training to the board members. Outline three (3) main rules that need to be considered in order to develop a sound executive compensation package.