Scientific Definition
EPS-targeted comp incentivizes buybacks even when reinvestment yields more.
Plain-English Definition
EPS-targeted comp incentivizes buybacks even when reinvestment yields more.
Feynman Explanation
Optimize the denominator long enough and the numerator goes away.
Core Principle
EPS-targeted comp incentivizes buybacks even when reinvestment yields more.
Mechanisms
Pending editorial review.
EPS-targeted comp incentivizes buybacks even when reinvestment yields more.
Pending editorial review.
Pending editorial review.
Capital allocation distorted by comp structure.
Pending editorial review.
Pending editorial review.
Inputs (Triggers)
Pending editorial review.
Outputs (Behaviors)
Pending editorial review.
Behavioral Signature
Optimize the denominator long enough and the numerator goes away.
Examples
- Capital returned via buybacks instead of long-term capability investment.
- Capital allocation distorted by comp structure.
Pending editorial review.
Famous Experiments
Pending editorial review.
Design Principles
- Long-term economic profit metrics in executive comp.
Measurement Approaches
Pending editorial review.
Evidence
Pending editorial review.
Pending editorial review.
The Perverse Incentive Lens™
How this behavior is exploited — and how to redesign around it.
- Long-term economic profit metrics in executive comp.
Pending editorial review.
Pending editorial review.
Interactive Mini Network
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Knowledge Graph Neighbors
Auto-linked to the rest of the Human Behavior Taxonomy by family, domain, dimension, and shared keywords.
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