Question: What is incentive-based compensation and how is it supposed to resolve the principal-agent problem? What challenges for corporate governance are posed by incentive-based executive compensation?

What is incentive-based compensation and how is it supposed to resolve the principal-agent problem? What challenges for corporate governance are posed by incentive-based executive compensation? Provide examples to illustrate. 400-600 words, need sources.

The subject is ethics for organizations, master in management.

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