Question: CEO pay-performance sensitivity is defined as the dollar change in CEO wealth for one thousand (1,000) dollars change in the wealth of the firm's shareholders.

CEO pay-performance sensitivity is defined as the dollar change in CEO wealth for one thousand (1,000) dollars change in the wealth of the firm's shareholders. Pay-performance sensitivities for CEOs in the United States vary widely, with values between three (3) dollars and fifteen (15) dollars being the most common. If a CEO's pay-performance sensitivity is ten (10) dollars, would you say that CEO's incentives are strong or weak? Why?

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