The principal agent model is often used to design performance based compensation systems. Select all that are true regarding this model:

Question options:

a)	There is a non-zero probability that despite managers making their best efforts, the firm performance measures will have poor results. This lowers the perceived fairness of the compensation system.
b)	Despite being a cost to profits, investment in internal controls will improve the accuracy of performance measurement and thus, the perceived fairness of the compensation system.
c)	The time horizon over which performance is measured and the reward is delivered should be considered to align managerial action with the firm's growth goals.