Question

Please edit and add something to the following part of my report.

Question: Should Mr. XX step back as managing director, what changes might be recommend for governance of the firm, including recommendations as to an appropriate plan for remuneration and reporting for the new Managing Director.

Answer: A succession plan is always good for the organisation to ensure continuity and facilitate new and younger leadership. The Remuneration plan should link profitability of the company to the MD's package plan in a significant manner.

Answer 1

A succession plan is good for the orgnaization to ensure continuity. It also helps in onboarding and making a career path for the new and younger leadership.The Remuneration plan should link profitability of the company to the MD's package plan in a significant manner. The remuneration plan can include stock options along with fixed and variable component to ensure alignment with the organization goals. This will ensure that the new MD gives in his best to increase the profitability of the company while attempting to increase the stock prices. Stock options are a good way of reducing the agency costs since the goals of the management will now be at par with the requirements of the shareholders.