Page 67 - Appreciating Organization's Biggest Assets

understanding the working of and minimizing the principal-
firms. Ross (1973), defines the agent conflict. Sigler (2011), if
agency prob- lem as “an agency there are problems in the executive
connection arises between agent pay components, it encourages
and the principal where the agents executives to take problematic steps
are man- agers who act on behalf further inviting problems to the
of principal which are the owners firm. Cash bonuses component
or stakeholders of the organization. provokes to focus on short term
The agents are hired to maximize benefits which can be detrimental
shareholders profitability and in the long run.
growth”. Duru et al. (2016) agreed Brickley et al. (1999), concludes
that managers don’t have complete that managers who improve
ownership of the firm, they don’t company’s overall performance
get total income gained by the firm can be given an opportunity to be
so they don’t perform at their best. a part of board of members after
Eisenhardt (1989), Managers look retirement. This could pos- sibly
for private benefits and shareholders be best incentive idea. He also
look for maximizing share value believes that CEO’s can be the
causing agency problem. Therefore suitable candidates for the position
an executive compensation should of director due to the experience,
be designed in a way that encourages knowledge and reputation they
CEO’s to extend their effort and at hold.
the same time balancing the risk
sharing between principals and Research Methodology
agents Lewellen et al (1987). Time Frame: Time Frame for this
According to Dahiya, Gete, and Ge case study was from October 10 to
(2017), considerable compensation November 10 2022.
should be paid to the top executives Research design: The type
with an aim of aligning the interest of research is descriptive and
of the company, shareholders and secondary in nature. Existing data
executives for maximizing benefits. is collected from multiple sources
Kaur et al (2018), explains the such as Company website, Books,
direct relation between company Internet and previous re- search
perfor- mance and stocks owned by papers and analyzed based on my
CEO. If more stocks are owned by understanding.
the CEO, the company would be
performing better and thus aligning
the CEO and shareholders interest

67