The article explores how to design the best pay plan for managers based on their performance and the company's profits. It suggests that giving managers more stocks and options over time can motivate them to work harder. This is because the power of incentives tends to increase as managers stay longer in the company. The study also shows that risk-averse managers may not benefit as much from high-powered incentives over time. The type of incentives given to managers with longer tenure depends on how risk-averse they are and how their performance changes over time.