Question
If you're in charge of an organization (let's say you're on the board of directors of a publicly held company), you need to be very
If you're in charge of an organization (let's say you're on the board of directors of a publicly held company), you need to be very careful about how you incentivize your CEO and other top officers. For example, maybe you've agreed to give the CEO and CFO a large annual bonus tied to the annual net income reported by the company. Is this a good idea? After all, the CEO and CFO will know that if the company is increasing its net income, they will directly make a ton of fast money in the way of an immediate bonus at the end of the year. How do you feel about this? Do you know of any examples of this? Might there be any unintended consequences? Has anyone ever heard of Al Dunlap?
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