"Starbucks Corp. SBUX -0.68% said it would mandate antibias training for executives and tie their compensation to increasing minority representation in its workforce" (WSJ Oct 2020).
Let's conduct a thought experiment. Suppose that the executives face incentives that encourage them to maximize profit (or value).
- If executives know that antibias training and minority representation increase profit, would Starbucks need to mandate antibias training and tie compensation to increasing minority representation? Would the mandate and compensation improve the alignment the interests of the executive and owners?
- Under what conditions would the mandate and compensation improve the alignment of the interests of executives and owners?
- Under what conditions would the mandate and compensation misalign the interests of executives and owners?
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