Why would a company make a boss a residual claimant of the firm?

A company might make a boss a residual claimant to align their interests with those of the shareholders, as it incentivizes them to maximize the firm's profits and overall value. By tying a portion of their compensation to the firm's residual profits, the boss is more likely to make decisions that enhance long-term sustainability and growth. This arrangement can also attract and retain top talent, as it offers potential for significant financial reward linked to the company's success.