Question

What incentives appear to be most effective in managing corporate governance and why?

Answer 1

Incentives that appear to be most effective in managing corporate governance are :

1.Linking of Board of directors and CXO's salary ,bonus and stock options to the performance of the firm. This will boost performance of the firm through strategic decisions and effective management of stockholders money.

2. Rotation of power among the directors and key managerial personnel which will install a sense of responsibility among all the board members.

3. Freedom must be given to explore new opportunities by preparing the right policies and procedures with out bureaucracy, which will help in growth, increase in size of the operations.