1. Public companies limited by shares are now required to publish the amount and form of compensation received by their executives (in addition to their salaries). The following incentive schemes for executives seem to be the most popular:

• performance bonuses based on stock prices;
• performance bonuses based on accounting profits;
• stock options

1. What should be the main financial objective of public companies limited by shares?
2. Discuss the criteria by which the effectiveness of the three listed incentive schemes should be judged.
3. Assess the potential effectiveness of the three incentive schemes in light of your answers to parts (i) and (ii).