Agency problem: Firm's performance and its relation to incentive plan

Bc. IRINA ZARANDIA

Diplomová práce

Abstract:

One of the central problems of any publicly traded company is the agency problem. This phenomenon represents the conflict of interests between shareholders and senior managers who are entitled to act on behalf of them. Theoretical part of this Diploma Thesis put emphasize on the essence of agency problem, its aspects and historical background. It follows with the explanation of incentive plans as the most effective form of reducing agency costs. Approaches to it and forms of CEO compensation are described as a continuation to previous literature review. The main aim of the Thesis is to investigate the influence of firm performance on CEO compensation. Four indicators of company performance were chosen as variables for a Linear Regression Model with a purpose to estimate that interrelation. Among them Return on Assets (ROA), Earnings Per Share (EPS), Price to Earnings ratio (P/E ratio) and Return on Invested Capital (ROIC). The model was constructed on the data found and calculated for German software company SAP SE. The analysis supplemented also with a questionnaire that was carried out in order to assess the awareness of employees about the topic of Agency problem and the CEO pay practices. All the results and finding are explained in chapters Results and Conclusions.

Keywords

Incentive plan, Agent, Agency problem, CEO, Firm performance

Jazyk práce: angličtina

Datum vytvoření / odevzdání či podání práce: 31. 3. 2021

Obhajoba závěrečné práce

• Vedoucí: Ing. Pavel Srbek, Ph.D.

Česká zemědělská univerzita v Praze

Provozně ekonomická fakulta

Magisterský studijní program / obor:
Economics and Management / Economics and Management