Abstract Employers are constantly looking for ways to attract qualified employees, and bonus plans have been a driving force in the business world. In recent years, the consequences of such plans have been carefully scrutinized. This paper examines some of the consequences that companies face when they make a decision to implement bonus plans. The discussion focuses on steps that can be taken to avoid the negative consequences of bonus plans, which include animosity among workers, lower productivity, and poor employee loyalty.
From the Paper "The article, "Bonus Plans: Why Most fail" explains that one of the best ways to avoid the negative consequences of bonus plans is to simply offer a fair wage. (Porter 2003) The author argues that the consequences associated with bonus plans could be eliminated if employers offered a living wage that is higher than that of similar companies in the same community. (Porter 2003) The author contends that offering a living wage coupled with holding employees accountable for their performance, will create the benefits that a bonus plan offers while avoiding the consequences that bonus plans present. (Porter 2003)"
Abstract This paper describes in detail discount certificates and bonus certificates. It provides some general information and features of certificates and discusses the engineering and financing of the certificates. The paper then examines the advantages and risks of using these certificates and it then provides a practical example to explain the concept.
Table of Contents:
List of Tables
List of Abbreviations
Introduction
Discount Certificates
General Information
Discounts
Caps
Engineering
Advantages and Risks
Example
Key Figures
Interpretations
Explanations
Bonus Certificates
General Information
Bonus Barrier
Engineering and Finance
Advantages and Risks
Example
Key Figures
Interpretations
Explanations
Summary and Conclusions
From the Paper "Both certificate types are constructed on the basis of an underlying value and some kind of option to finance the mentioned securities as well as benefits. Certificates are sold like share at the stock exchanges in Frankfurt and Stuttgart, as well as through direct trade. Emitter like ABN AMRO sets everyday prices for the products to give liquidity for trade to the investors. There are two different prices offered, the bid and the ask price. The spread in between will finally be the profit for the emitter. Furthermore they make profit through the time value of put options. Offering certificates bears nearly no risk for the emitter. Discount certificates are based on an adverse development that equilibrates any development in the market."
Abstract This paper looks in detail at these types of packages, listing that they consists of five basic components: 1) base salary, 2) annual incentives /bonuses, 3) long-term incentives and capital appreciation plans, 4) employee benefits, and 5) perquisites. Each of these components are analyzed for the short and long term benefits.
From the Paper "In 1996 the average salary plus bonus for CEOs was $2.3 million. After other benefits were added, this sum rose to $5,781,300. Beginning with Revlon executive Michael Bergerac who broke the $1 million mark in 1974, executive pay and bonus plans have soared to mind-boggling proportions. Although various governmental agencies have set limits on tax-deductible executive compensation, these efforts not only failed but served to raise the bar on executive compensation even higher (Milkovich and Newman 455). In general, the CEO of a corporation makes at least twice as much as the next highest paid executive and 35 times the salary of the average worker (Bogie 118). This pay disparity becomes even more alarming when bad leadership causes mass layoffs and shareholder losses even as top executives continue to receive their oversized pay."
Tags: perk, benefit, salary, bonus, employer, employee, company
This paper discusses revenue and expense recognition methods, both standard and percentage of completion criteria, and the pros and cons of expensing stock options.
930 words (approx. 3.7 pages), 4 sources, APA, $ 33.95
Abstract This paper explains that expenses are recognized in the same period in which the benefits derived from those costs are recognized (the matching principle) and, thus, recognition of expenses is dictated by revenue recognition; therefore, associations between revenues and costs must be established. The author points out the pros of expensing options include providing a level playing field so that companies, which use cash bonuses, and companies, which use stock options, each have an expense on the income statement; however, there are many significant challenges for a company that expenses options. The paper recommends that manufacturing companies use accrual basis accounting and follow GAAP guidelines for revenue and expense recognition and, with regards to expensing stock options, the company might explore the use of stock awards instead of stock options.
Table of Contents
Introduction
Revenue and Expense Recognition Methods
Expensing of Stock Options
Recommendations
From the Paper "The revenue recognition and matching principles mentioned above are used under the accrual basis of accounting. Under cash-basis accounting, revenue is recorded only when cash is received, and expenses are recorded only when paid. However, GAAP requires accrual basis accounting because the cash basis often causes misleading financial statements. With accrual basis, revenue must be recognized in the accounting period in which it is earned, not just when money is exchanged."
Abstract This paper discusses the seemingly ludicrous executive compensation packages. The paper attempts to distinguish the relationship between company success and executives' efforts, claiming this to be an indication of how much an executive should earn. The paper examines the different components of high level executive compensation packages: High salaries, large bonuses, generous perquisites and so-called golden handshakes and parachutes.
From the Paper "Sometimes it seems that the salaries executives make at big corporations are entirely out of proportion with the value added to the firm by their being on the payroll. It makes sense that if someone, anyone, makes a certain wage, then they should be making at least that much money for the company. If someone is pumping gas for $7/hr, then he should be pumping at least $7 worth of gas every hour. If someone else is making $30 million/year at a big corporation, then he should be bringing in at least that much revenue, even if only indirectly. If a $30 million/year executive starts programs at the company that make $100million, then the $30 million the company pays him is well-worth it. The trouble is that it is sometimes hard to decide the degree to which company performance is the result of an exec's contribution."
Abstract This paper addresses the question of whether an organization can identify the compensation strategy that is most effective for it and how it can establish a methodology to ascertain what that compensation strategy might be. The paper includes a completed review of the relevant literature as well as a research design methodology. Finally, the importance of compensation strategies to contemporary organizations is noted and personal reflections of the author's relationship with God are revealed as central to the development of this project.
Outline:
Abstract
Problem Statement
Research Objectives
Literature Review
Importance of Study
Research Design
Budget
Measurement
Reflections
From the Paper "Compensation strategies typically fall within the functional control of human resources (HR) within most organizations. HR management has become one of the last remaining functional areas of an organization where differentiation can be achieved in the marketplace and where competitors might still be appreciably out performed. The reasons for this revolve around the ubiquitous and relative inexpensive character of technology and technological applications that have levelled the competitive field across all industries. Essentially, no matter where a company is located it can access and deploy the very same technological solutions as any other competitor; thus, organizations have determined, and correctly so, that human resources are a vital source of competitive edge if managed properly. "
Abstract In this article, the writer looks at the ethical elements of the discussion regarding bonuses and compensation for the CEO of an organization. The writer maintains that it is ethical for CEO's to receive large compensation packages, but only if it is inclusive of benefits for all stakeholders, not at the expense of them. The writer notes that the best way to do this is through long-term compensation packages that focus on long-term commitment and vision. The writer discusses that these packages must also focus on long-term profitability and growth for the organization, job security for employees, and return on investment for shareholders and other investors. The writer concludes that ultimately, CEO compensation should realistically follow measurable performance that benefits all stakeholders, not just a few.
From the Paper "The argument designating increasing CEO pay and decreasing shareholder value as unethical is an easy one to make. There is, however, a case to be made on the other side of the issue. Some argue that increasing CEO compensation is a simple matter of supply and demand and is driven by market forces. Others argue that the transition costs of replacing a CEO could be considerably more than the bonuses they receive. Yet another argument is that market fluctuations are inevitable and increasing bonuses are needed to retain top talent and that the investment will pay off over time. Eamonn Walsh goes as far to say that some CEO's are actually underpaid when comparing CEO compensation to stock value. It should be noted that this article focuses on the European market were CEO compensation is generally lower than in the United States. Research has shown that organizations in which their CEO's are compensated in the top 10% have an 80% percent chance of their stock outperforming their peers. Of this group the gains in market capitalization far exceeded the CEO compensation package about 80 percent of the time. On the other hand, organizations offering the lowest compensation had only a 50-50 chance of outperforming their peers."
Abstract The paper explores the concept of merit pay for individual teachers, in the form of bonuses or permanent salary increases, and their effectiveness in improving student performance and teacher attrition rates. The paper looks at several states that have successfully implemented merit pay programs and considers studies that have found a generally positive relationship between merit pay and improvements in student achievement. The paper also discusses past failed attempts at instituting merit pay systems, and the importance of new pay-for-performance programs countering the previous failures.
Outline:
Abstract
Introduction
Merit Pay for Teachers Concept
Union Resistance Supporting Mediocrity
Merit Pay Stories of Success
Research Demonstrating the Potential of Merit Pay
Milken Family Foundation's Teacher Advancement Program
Recommendations for Merit Pay Systems
Conclusion
From the Paper "The public education system, as it currently exists, was developed in the middle of the 19th century. Following the industrial model of this era, teachers were seen as assembly-line workers. They added value to their product (their student) and then passed it along to the next worker on the line. With this concept, all workers must be interchangeable, and each must work independently. This isolation and egalitarianism combine powerfully to perpetuate a culture that is resistant to reform initiatives, according to Boles and Troen (2007)."
Abstract The paper discusses the new benefits package that will help to retain Kokomo, Inc.'s existing staff and reduce the current turnover rate. The paper discusses the standard items of the package, as well as some attractive perks to help employees feel that they are valuable members of the team. The paper relates that the benefit package is well-below budget, which allows for worst-case scenarios, as well as future increases in costs. The paper concludes that this benefits package will result in a highly competitive work environment that will attract the international flooost formers that the company desires and will result in long-term health for the Kokomo company.
The paper includes color graphs.
From the Paper "Employees are the lifeblood of any company. Experienced employees are more valuable because they are past the learning curve and represent the most productive members of the working staff. Retaining experienced employees represents a critical strategic move that can have excellent payoffs in the end. Experienced employees make fewer mistakes and often represent the most efficient workers. Training new employees costs money and it often takes time until they become proficient at their jobs. These are only a few reasons for the necessity to attract quality workers and then take positive measures to keep them for the long haul."
Abstract In this article, the writer explains that merit pay, or pay-for-performance, compensation schemes base employee pay raises on their performance instead of awarding pay increases or bonuses automatically based on periodic raises according to schedule. The writer maintains that in principle, merit pay motivates higher performance because the eligibility for pay raises is determined by relative performance. The writer then discusses that in many cases, this is true, but merit pay is more likely to generate problems not associated with automatic pay systems in certain industries. The writer maintains that generally, merit pay is best suited to industries where performance is measured strictly by output. The writer concludes that certain vocational environments are more likely to benefit from merit pay than others, but in all cases, effective management oversight is necessary to ensure the positive outcome envisioned by merit pay system proponents.
Outline:
Abstract
Automatic Pay Systems Issues
Merit Pay System Issues
Industry-Specific Merit Pay Issues
Conclusion
From the Paper "To a certain extent, merit pay reward systems can re-establish
elements of this psychological connection to vocational achievement by providing a means through which workers can once again be motivated to perform their best work, provided only that some objective criteria exists for measuring output.
"To illustrate, where a farmer produces milk and eggs for competitive sale at a profit over his costs, there is a very direct relationship between his commitment to his work (as represented by the volume of his milk and egg output) and his compensation. The more he works and the more efficiently he works, the more he earns for his efforts. Conversely, where a secretary works at the headquarters office of a large industrialized corporate farming company, there is little connection, and therefore little direct psychological reward for performing well on the job."
Abstract In 1997, Ford Motor Company paid a total of $10.7 million in salary, bonuses, and options to its Chairman Alex Trotman, whose bonus alone was $7 million. In that same year, Daimler-Chrysler paid Robert Eaton $6.1 million. During that same period, the workers who provide the vehicles only received 3 percent raises in 1997.
From the Paper "AMERICAN CHIEF EXECUTIVE'S PAY
In 1997, Ford Motor Company paid a total of $10.7 million in salary, bonuses, and options to its Chairman Alex Trotman, whose bonus alone was $7 million. In that same year, Daimler-Chrysler paid Robert Eaton $6.1 million. During that same period, the workers who provide the vehicles only received 3 percent raises in 1997. "The industry continues a two-pronged strategy to maintain healthy profits: cut costs even as they increase incentives to lure new car and truck buyers into showrooms" (Howes, 1998, ARC).
The auto executive's pay was far greater than the average of CEO pay of 3.68 million salary, bonus and long-term incentive payouts received by "the chief executives of the nation's 200 largest corporations as tracked by Pearl Meyer & Partners Inc., a New York ..."
Abstract Overview of need for performance-based systems of rewards and incentives. Challenge of recruiting and retaining highly qualified, productive health care staff members. Examines the kinds of rewards that are in current use. Company-wide and one-on-one rewards. Strengths of various strategies; wage increases, bonuses, productivity bonuses, profit-sharing.
From the Paper "Health Care Company Reward Systems: An Overview
Health care service providers, institutions and employers are continually challenged to recruit and retain highly qualified, productive staff members in such disparate fields as nursing, medicine, the therapies, and administration (McCoy, 1999). To succeed in meeting this challenge, it is essential for the health care company, regardless of its structure or its specific mission and practice orientation, to develop effective, valued, and performance-based systems of rewards and incentives. This brief report will draw upon the literature to examine the kinds of rewards (both company-wide and one-on-one systems) that are in current use and the relative strengths of each strategy.
In many health care companies, money in the form of wage increases, bonuses, productivity bonuses tied to units of ..."
Abstract This paper explains that, according to the classical economic theory of employee pay including the Chief Executive Officer (CEO), an employer should pay its employees such that the marginal cost equals marginal productivity; however, contrary to this theory of fair pay, CEO salaries have been growing much faster than the average worker's pay and thus the productivity of many companies may not be matching that of the increases of pay of the CEO. The author states that the argument for large salaries for CEOs is that CEOs' actions influence a large number of people; thus their pay is in line with the stress, responsibilities, their wealth of real life and academic education, their experience and the implications of their actions. The paper concludes that, when a CEO salary plan slants heavily to stock options and bonuses, which are based on company performance, executives will be encouraged to work hard; however, simply conferring inflated salaries and bonuses do little to benefit the long-term future of the company and make little economic sense.
From the Paper "However, despite the distaste for unethical actions on the part of CEOs, the illegal behavior upon the part of prominent CEOs at Martha Stewart Omni media and Tyco should not be confused with the issue of legitimate, if over-inflated executive pay or even the overgenerous bestowing of perks upon CEOs of other corporate entities. Most companies have rules regarding the reporting of perks. For example, when Robert J. Genader was promoted to chief executive of AFG, (Ambac Financial Group) last year, "he received a $100,000 raise in his salary, to $525,000. But he did not use the extra money to cover the $40,000 initiation fee at a club he joined (but has not identified). Ambac shareholders paid for that, as well as $11,637 in membership fees, according to the company proxy." "
A discussion of the feeling of many members of the public that the huge sums of stock options and cash payments that many of the CEOs of the top U.S. companies currently receive are largely unjustified.
1,061 words (approx. 4.2 pages), 5 sources, 2000, $ 37.95
From the Paper "Criticism of executive compensation packages has increased rapidly over the past few years. They are many people in the general public who feel that the huge sums of stock options and cash payments that many of the CEO's of the top U.S. companies currently receive are largely unjustified. About 20 years ago, the main component of executive compensation was cash, in the form of bonuses and salaries. The problem with cash payments is that they alone do not guarantee that a CEO will make decisions that will be in the best interests of the shareholders. In an effort to better tie a company's performance to the CEO's compensation, many top executives began receiving large stock option grants in exchange for large cash payments. This meant that executives now had to make a concentrated effort to raise their firm's stock price if they wanted to profit from their compensation plans. Unfortunately, by using a fixed price, conventional stock options have pitfalls that allow executives to profit at the expense of the shareholders. The exercise price is established at the market price the day the options are granted, and the option holder can then cash in on the options if the stock price rises above the exercise price. One of two problems with this method is that it encourages CEOs to make decisions that will raise the stock price in the short term but ignore the stock's performance in the long term. This allows the executive to make a quick profit by cashing in his or her options as soon as the stock price rises and then jumping ship as soon as the stock begins to falter. ?The other problem with this option plan is that it rewards a mediocre CEO if the value of the company increases due to a bull market even if the company's gain is well below that of its competitors,? (Hall 2000). These reasons are why the traditional method of granting stock options must be altered somewhat to better tie the executive's compensation to the performance of the company. "
Abstract An examination of the ongoing conflicts between India and Pakistan and how the introduction of nuclear weapons has effected their conflicting relationship. The author reveals how nuclear proliferation has its bonuses in minimizing threat between the two countries yet simultaneously threatening global security.
From the Paper "There is no larger threat to the world than nuclear warfare. A World War in which nuclear weapons were used would undoubtedly cease life as we know it on earth. This outcome would be attributed to the direct effects of the bombs and the indirect effects a nuclear winter would bring about. This fact leads the majority of people to believe that the less amount of nuclear weapons on the planet the better. Now let's say that you live in India or Pakistan, neighboring countries that have fought each other in the past. Many people have died in battles between these two countries. Within the last few years each of these countries has acknowledged the fact that they possess nuclear weapons by testing them underground for the world, and especially each other, to see. So was the introduction of nuclear weapons a good or bad thing for the future of relations between India and Pakistan? The introduction of nuclear weapons into the militaries of these two regional powers was a huge step in reducing the chance of all-out war between the two rivals due to nuclear deterrence. However, just because the threat of nuclear attack has slowly helped start India and Pakistan on the road to peace, it does not necessarily mean that the world would be better off if every nation had nuclear weapons."
Tags: cold, india, pakistan, war, security, destruction, human
