Active Learning Question

Goal Alignment at a Small Manufacturing Company

The owners of a small manufacturing company have hired a manager to run the company with the expectation that he will buy the company after five years. The compensation of the new vice president is a flat salary plus $75\%$ of the first $$150,000$ of profit, and then $10\%$ of profit over $$150,000.$ The purchase price for the company is set as $4\frac{1}{2}$ times earnings $($profit$),$ computed as average annual profitability over the next five years. Does this contract align the incentives of the new vice president with the goals of the owners?

What is the problem? How do you solve it$?$ Remember to put yourself in the role of the newly hired manager.