Explain how incentive pay might have negative effect

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Reference no: EM131197834

Although some components of pay such as bonus, stock or stock options can provide incentives for managers to act in shareholder interests, sometimes they can have a negative effect and lead managers to make decisions that are not in shareholder interests. (Difficult)

a. Explain how incentive pay might have a negative effect?

b. Identify and briefly explain two governance mechanisms that might help mitigate the negative effect of incentive pay?

Reference no: EM131197834

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