Question: Some say that any self- respecting top manager joining a company does so with a front- end signing bonus. In many cases this bonus is

Some say that any self- respecting top manager joining a company does so with a front- end signing bonus. In many cases this bonus is in the seven figures. At the same time the entering manager may be given a bonus guarantee. No matter what happens to firm profit, he or she gets at least a percentage of that bonus. Do long- term bonus guarantees help to solve the principal- agent problem, or do they exacerbate it? Why?

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