2000•Unpublished venueRequires access

An analysis on budget based compensation plan and linear compensation plan

Hong Jian

Abstract

Budget based compensation plan and linear compensation plan are investigated under the principal agent framework. By building simplified models and analyzing numerical results to these models, we identify a basic factor that has great influence on firm's compensation plan choice issue. The simulation results help firms on how to design compensation plans according to the quality of their managment performance evaluation systems.

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Key concepts: Compensation (psychology), Plan (archaeology), Computer science, Principal (computer security), Quality (philosophy), Operations research, Linear programming, Compensation methods