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Question

Please answer the following question. Refer to rubric below question to guide for full explanation.

1. The manager of your company's pension fund is compensated entirely based on fund performance; he earned over $1.2 million last year. As a result, the fund is contemplating a proposal to cap the compensation of fund managers at $250,000. Provide an argument against the proposal. You must give an explanation.


Full Marks

Answer is correct and complete. Student explains why the compensation of managers should not be capped,


2. When the owner of a business is also the manager, is there a principal - agent problem? Please explain.

Full Marks

Student explains whether there is a principal agent problem and why (or why not).


3. Would commission based compensation, where an employee is paid a commission on her total sales, give an incentive to the employee to control costs? Please give an explanation.

Full Marks

Student explains completely whether employees have an incentive to control costs

Step-by-step answer

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Subject: Business, Economics

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