QUESTION 2 (10 Marks - Suggested time approx. 35 minutes) a) One of the key issues associated with management control is the alignment of the organisations interests with those of the management of the organisations (goal congruence). Normally, this is achieved with a compensation plan that rewards executive management for good financial performance. Agency Theory explores how contracts and incentives can be created to motivate individuals to achieve goal congruence. Other theories related to the issue of motivation include Hertzbergs Hygiene Factors and Expectancy Theory. In this context, discuss the following statement. Managers should be rewarded only on the basis of their performance measures. In other words they should not be paid a fixed salary or other fixed non-financial rewards. The managers remuneration should be in a form that directly reflects the performance of the economic unit they are responsible for. Your discussion should include (but not be limited to) whether you agree (or disagree) with the statement and why; and a summary of the motivation theories indicated in the preamble to the question (above); and how these theories relate to this particular statement. (4 marks - Suggested time 15 minutes) b)Describe and discuss the advantages and disadvantages associated with each of the following incentive compensation schemes. i. Individual incentive plans such as salary increases, bonuses, or other non-financial rewards. ii. Profit Sharing and/or Gainsharing plans iii. Share option plans iv. Team based incentive plans. (6 marks - Suggested time 20 minutes) (TOTAL 10 MARKS)