Goal Alignment at a Small Manufacturing Concern

.

The owners of a

small manufacturing concern have hired a manager to run the co

mpany with the

expectation that he will buy the company after five years. Compensation of the

new vice president is a flat salary plus 75% of first $150,000 of profit, and then

10% of profit over $150,000.

The p

urchase

price for the company is set as 4

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?

o

Requirements:

250 words minimum, Do no plagiarize!! Follow instructions!! Answer all parts of question!! Do no copy and paste another answer from somewhere!