Tying compensation directly to profitability will probably drive managers of weak departments to take extra risks to boost income. Out-of-the-money options can cause the same problem. If managers are required to buy stock, some may opt to use equity swaps to monetize their holdings. Company employees are not likely to become more willing to blow the whistle on improper conduct until they are confident of their anonymity and/or the board’s willingness to act, neither of which has been addressed |
