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The above article applies to financial management in terms of attaining the objective of financial management, which is to maximize the wealth of stockholders Brigham and Houston, 2002). The case fact admits the “pay-for-performance schemes offer potential benefits to shareholders in the form of reducing agency cost by better aligning shareholder and managerial interests. ” By analogy, reducing agency costs is one of the concerns of financial management because of possible conflict of personal goals with shareholder wealth maximization and managerial compensation is one of the specific mechanisms to motivate managers to act in the shareholders’ interest. The case fact further admits that said “systems offer benefits and risks that must be addressed if a system is to be effective”,…