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Non-Tech : Cendant Corporation (NYSE:CD)
CD 5.240+2.6%Jan 20 3:59 PM EST
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To: Jeff Lins who wrote (2609)11/26/1998 9:51:00 AM
From: Wren  Read Replies (2) of 3627
 
Jeff, you point out an interesting fact about incentive programs effect on the thinking of top management, and the possibility of making them too cautious in order to protect their own personal net worth.

In a slightly different situation, I know a CEO of a small business, who owned just a small amount of the stock. As an incentive, he received a bonus of 27.5% of the company's pre-tax net income. He began to look at each dollar spent as 27 1/2 cents out of his own pocket. Consequently, the company began to take the short view. They did not spend money to expand their markets, etc. Over a period of years, the company dwindled away and now is only a memory.
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