1. If a companys board of directors wants management to maximize shareholder wealth, should the CEOs compensation be set as a fixed dollar amount, or should the compensation depend on how well the firm performs (that is, the company’s performance)?
2. If it is to be based on performance, how should performance be measured?
3. Would it be easier to measure performance by the growth rate in reported profits or the growth rate in the stocks intrinsic value?
4. Which would be the better performance measure? Why?
