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You are employed by PamVim Holdings Plc, the largest publicly listed bank by market capitalization in Chamet Republic. RebMaz, the board chair of PamVim, has been enlisted to attend and present a paper at the annual conference of the International Institute of Governance and Sustainability (IIGS). The board chair has asked TanMat, the CEO of PamVim, to constitute a taskforce of the five most senior finance executives to draft a paper advising and reporting to him on the five aspects outlined below:
With reference to the above case and a review of the extant literature:
Evaluate why it might be appropriate for some or all of the NED fees to be paid in shares? What are the practical difficulties with this proposal?
NEDs can be paid in shares:
Pros: makes them better aligned with the success of the company
Cons: makes them more dependent on performance of the company (and they are not supposed to have company-performance related pay).
I don’t know about practical problems.
I suggest you review the literature, but here’s a start: