performance incentive schemes such as profit-sharing or team incentives. The appropriate approach depends on each company's unique … situation, and managers need to realize that individual bonus plans are not a panacea to motivate employees. …

-taking incentives in addition to effort incentives. We develop a stylized principal-agent model that captures the interdependence … between firm risk and managerial incentives. We calibrate the model to individual CEO data and show that it can explain … with the almost uniform use of at-the-money stock options. We conclude that the provision of risk-taking incentives is a …