For decades, much of management theory has started by modeling the relationship between a principal and an agent. The principal wants their agent(s) to perform a task or function but can’t always monitor or evaluate their efforts — which means the agent can decide whether to fulfill their assigned tasks or shirk. In order to solve this “agency problem,” scholars have suggested shareholders incentivize senior managers based upon shareholder value. Senior executives can then hold managers accountable for key performance indicators, which contribute to shareholder value.