User Account

All Pages

What are the weaknesses of incentive plans based on eps

Assignment Help Accounting Basics
Reference no: EM133095848

Question - Alternative Compensation Plans ADM Inc., an electronics manufacturer, uses growth in earnings per share [EPS] as a guideline for evaluating executive performance. ADM executives receive a bonus of $5,000 for every penny increase in EPS for the year. This bonus is paid in addition to fixed salaries ranging from $500,000 to $900,000 annually. Cygnus Corporation, a computer components manufacturer, also uses EPS as an evaluation tool. Its executives receive a bonus equal to 40% of their salary for the year if the firm's EPS is in the top third of a list ranking the EPS for Cygnus and its 12 competitors.

Required -

1. Why are companies such as ADM and Cygnus switching from stock option incentives to programs more like the ones described? What does the use of these plans by the two firms say about each firm's competitive strategy?

2. What are the weaknesses of incentive plans based on EPS?

Reference no: EM133095848

Questions Cloud

Cipd resourcing and talent management : Need paper for CIPD Resourcing and Talent Management to Sustain Success level 7 - future of strategy and practice in the field of resourcing and talent manageme
What are the four macromolecules : What are the four macromolecules? What are the sections of the small intestines? What two organs are connected to the duodenum?
Primary causes of voluntary turnover : For the three primary causes of voluntary turnover (desirability of leaving, ease of leaving, alternatives), might their relative importance depend on the type
Application and interview process : Describe the information which should be provided to applicants during the application and interview process.
What are the weaknesses of incentive plans based on eps : ADM executives receive a bonus of $5,000 for every penny increase in EPS for the year. What are the weaknesses of incentive plans based on EPS
Research Project on Bank selection criteria : Research Project on Bank selection criteria used by international students - who will be involved in your research and how many; as well as any
Describe two methods of measuring performance : a) Describe two methods of measuring performance. b) For each of these methods, describe a scenario for which the method of measuring performance is appropriat
Describe what each of these key learnings are : Reflect two key learnings you have had in this course. a) Describe what each of these key learnings are
What is mechanism of action of antibiotic : Your female patient presents with a temperature of 103°F, nausea, and pain on urination. What is the mechanism of action of this antibiotic?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd