A recent magazine article on Japan’s economic problems stated, “As the post-war baby-boomers reach their 50s, Japan’s lifetime employers are carrying the cost of paying their senior workers more than they are worth.” Is this comment consistent with economic theory? Explain.
A recent magazine article contained the following quote:
There has been a welcome shift in CEO pay away from stock options, which are often tenuously related to performance, and toward discretionary bonuses.”
Use economic theory to analyze the dual claim that stock options are tenuously related to CEO performance and that moving away from them and toward bonuses will strengthen incentives for CEOs to perform well.