e) Briefly discuss the consequences and meaning of the Jump at Point A and the cap at Point B in the graph below. A Typical Executive Compensation Plan* Salary & Bonus B Сар Hurdle Salary 80% 120% Performance Measure = Target * Adapted from Jensen's graphic, p. 97. When hurdle A is reached the manager receives a bonus. The bonus increases until it hits the cap B, but the kinks in the line create incentives to game the system. Adapted from: Jensen's graphic, p.97.

e) Briefly discuss the consequences and meaning of the Jump at Point A and the cap at Point B in the graph below. A Typical Executive Compensation Plan* Salary & Bonus B Сар Hurdle Salary 80% 120% Performance Measure = Target * Adapted from Jensen's graphic, p. 97. When hurdle A is reached the manager receives a bonus. The bonus increases until it hits the cap B, but the kinks in the line create incentives to game the system. Adapted from: Jensen's graphic, p.97.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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