Agency Problems, Compensation, and Performance Measurement推荐.pdfVIP

PART 3 CHAPTER 12 BEST PRACTICES IN CAPITAL BUDGETING Agency Problems, Compensation, and Performance Measurement So far we’ve concentrated on criteria and proce- of the firm. The problem is to get everyone working dures for identifying capital investments with positive together to maximize value. NPVs. If a firm takes all (and only) positive-NPV projects, This chapter summarizes how corporations grapple it maximizes the firm’s value. But do the firm’s managers with that problem. The two main topics we cover are: want to maximize value? • Incentives: Making sure that managers and Managers have no special gene that automatically employees are rewarded appropriately when they aligns their personal interests with outside investors’ add value to the firm. financial objectives. So how do shareholders ensure • Performance measurement: You can’t reward that top managers do not feather their own nests or value added unless you can measure it. Since grind their own axes? And how do top managers ensure you get what you reward, and reward what you that middle managers and employees try as hard as measure, you get what you measure. they can to fi