Executive Compensation and Agency Problem

Agency problem exists in every business because of the interest conflicts between managers and shareholders. There is a need to find balanced method increase business’ profit ensure managers’ working efficiency. Employees can reach their potential ability under this harmonious environment that everyone show talents on own stages. A compensation package one solutions maintain balance provide mutual benefits those two parties. Businesses choose different applications with stock ownership guidelines achieve goal varied markets. Each fields will have specific requirements for managers. The incentive plan encourage motivation protect shareholders’ from overpaying or underpaying. performance related evaluation gives manager opportunities challenge themselves earning profit. Their be compared colleagues which company competitive environment.