Performance Incentives and disincentives

 Incentives
– an additional payment to employees as a means of increasing output bonus premium
– like a prize, bonus, or award given as an inducement to purchase products, enter
competition initiated by business interest etc.

 Disincentives
– is something which discourage people from behaving or acting in a particular way.

 Pay Dependent on Profit Level

– this system is the most effective way to increase not only the value of shareholders
wealth but also the value of the firm, both in tangible and intangible.

 Share Incentives
– it’s keeping the share awarded in a trust for employees until they either leave the job
or decide to take the share from the plan.

 Shareholder’s Intervention
– the shareholder’s today is now more active than before. Some of them are active
institutional investors who will definitely exercise a more directly influence over the
performance of an enterprise.

 Threat of being fired

– the threats of firing an employee aim to influence them to accept change, even
thought the threat might not be real.

 Takeover threat
– I will discuss the following issues of takeover threat. First, we show that due to a
takeover threat, the effort exerted by the manager will decrease. It is usually argued
that a takeover threat will discipline the manager and increase his effort, yet in our
model, a takeover threat introduces the possibility that the manager will be overruled.
If he is overruled, the effort he has taken in evaluating different projects will be
wasted. Second, a takeover threat has two effects. On the one hand, if there is a
takeover, shareholders earn more since they receive more for their shares than they
would in the absence of a takeover. On the other hand, as we saw above, the effort of
the manager is lower with a takeover threat, which reduces shareholder
value. Third, again, there are two countervailing effects. On the one hand, if there is a
takeover, the raider will implement a project that yields higher firm value. On the
other hand, the takeover threat reduces the manager's effort. The value of the firm
decreases with a takeover threat when the interests of shareholders and manager are
sufficiently aligned and when the private benefits of the manager are sufficiently high
that he has a strong incentive to exert effort. Last,  the extent of anti-takeover defences
that would be preferred by shareholders. To do so, we decompose shareholders into
individual shareholders who have shares only in the target firm and institutional
shareholders who also have shares in the raider. 
 Role of the non-executive directors
– the Non-Executive Directors provide an independent view on the running of our
business, governance and boardroom best practice. They oversee, constructively
challenge and hold to account, management in their implementation of strategy within
the Group's system of governance and the risk appetite set by the Board.

 Non-executive directors have the responsibilities in the following areas:

 Strategy
– the Director Strategy provides leadership and direction to ensure the
development and implementation of innovative strategies in line with cluster
priorities, and designed to meet Government objectives and policy
directions.

 Establishing Network
– networking contributes to your social well-being. Networking leads to the
exchange of ideas. Networking helps you meet people at all professional
levels. Networking boosts your professional confidence.

 Monitoring of Performance
– helps calibrate those goals by providing insight into where someone is
doing well and could be stretched and areas that are not a strength yet.

 Audit
– oversees and performs auditing duties to ensure that a company is in
compliance with regulations and policies.