The owners of a small manufacturing company have hired a vice president to run the company with the expectation that she will buy the company after five years. In this initial contract, compensation of the new vice president is a flat salary plus 75% of the first $150,000 profit, then 10% of profit over $150,000. The goal of the owners of the firm is to maximize profits.

A contract that allowed the vice president to keep 80% of profits above $150,000 would make the incentives of the vice president more or less? aligned with the goals of the firm, as compared to the original contract.

The question is will the contract that allows the vice president to keep 80% of the profits above $150,000 would make the incentive MORE OR LESS aligned with the goals of the firm.