[bumby]

>that portion of their compensation is directly tied to the value of the company.

One small nuance: it can be disproportionately tied to the short term value of the company. One of the moral hazards of this compensation scheme is that it may incentivize an executive to make decisions that inflate the value of the company short term while also de-valuing it long term (when they are no longer part of the company -- presumably after they've extracted that value).