To address this problem the authors suggest the need for a reexaminatio agent

To address this problem the authors suggest the need

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To address this problem, the authors suggest the need for a reexaminatio agent paradigm. This paradigm assumes that in order to align the interes (shareholders, or shareowners) the rewards to agents (the managers/dec be linked to long-term share performance. While widely taught in busines the underlying basis for structuring the incentive-compensation plans for authors suggest the need to reexamine this paradigm. Fundamentally, th assumption of the need to tie incentive-compensation to long-term stock Unfortunately, they do not propose a viable alternative. They suggest onl logic of conventional wisdom in this regard should be challenged. For exa
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that because today many shareowners are not really shareholders, incre short-term earnings performance actually better aligns agent actions with principals. This, of course, is interesting "food for thought"!
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nsen, Tools hods following DCF) and agers to s in innovation. ure investments that attempt imary driver f almost es beyond the by managers ose to counter s of this decision-makers g with this s caused, cs. What commendation ss that lies at the ion errors on the aury
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ompetitive olate the current e potential for , "In most situations, n price and margin ecreases, and a hind! The under- n evaluating long- ers should or the firm in the wering this question ge of scenarios, the al future. ers, as a way to s, simply assume a ows beyond this (near- he project's "terminal the terminal point, of a constant amount into d by dividing the into infinity.? matics of the approach inflows (because the inflows), and (2) the ed above in point #1. vary in response to an d to as "capacity-related" duce. Fixed costs that , such costs would be scount rate and g is
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not affected by any ether or not an are not relevant for n practice some equate to support the ties required for le of Nucor and USX erlying error of logic novation investments. ew entrants and w the competive not tant for determining mer is more appropriate s sense, it is more than a project. erm) earnings per share e numbers are . In part, this bias may s easily compared the fact that there is gs-per-share growth projects that might effects on short-term on of the principal- sts of principals cision-makers) need to ss schools today, and many executives, the hey question the appreciation. ly that the underlying ample, they suggest
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eased emphasis on h the objectives of
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Pr. 12-61: Research Assignment, Sustainability Background Additional websites that can be consulted: Required 1. According to the authors of the article, what was the managerial quest facing management of Jiminy Peak Mountain Resort? Jiminy Peak Mountain (Ski) Resort is similar to other such resorts in two ma uses a significnat amount of energy (snow-making machines), and (2) this e is seasonal (and, uneven even in "winter" months)--more snow needs to be early in the season.
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