An organisation's board decides that it needs to provide incentives for senior management to further the organisation's goals. The board decides to provide bonuses based on increases in share value, measured at the end of each financial year. Bonuses are to be paid in shares which can be held by the managers or sold on the market. What are the implications of introducing such a bonus system?

An organisation's board decides that it needs to provide incentives for senior management to further the organisation's goals. The board decides to provide bonuses based on increases in share value, measured at the end of each financial year. Bonuses are to be paid in shares which can be held by the managers or sold on the market. What are the implications of introducing such a bonus system?

Systems Analysis and Design (Shelly Cashman Series) (MindTap Course List)

11th Edition

ISBN:9781305494602

Author:Scott Tilley, Harry J. Rosenblatt

Publisher:Scott Tilley, Harry J. Rosenblatt

ChapterTPC: Toolkit Part C

Section: Chapter Questions

Problem 2DT: In this Toolkit Part, you learned how to use payback analysis, ROI, and NPV to assess IT projects....

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The board of directors of a company decides that senior management has to be rewarded in order to achieve the company's objectives. The board of directors selects whether or not to award bonuses based on growth in share value at the end of each fiscal year. Bonuses will be given in shares, which the managers can keep or sell on the open market. What are the ramifications of implementing a bonus system like this?
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