“We believe that it is important for director’s reward to be performance -related. Moreover, we expect excellent performance in both short and the long term. So we calculate bonuses on the annual profits then we have a parallel 3-year scheme which rewards directors if EPS grows by 30% over that period” Comment on above phrase. What is the challenge faced by a company in determining directors’ remuneration.

“We believe that it is important for director’s reward to be performance -related. Moreover, we expect excellent performance in both short and the long term. So we calculate bonuses on the annual profits then we have a parallel 3-year scheme which rewards directors if EPS grows by 30% over that period” Comment on above phrase. What is the challenge faced by a company in determining directors’ remuneration.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter1: Introduction To Cost Management

Section: Chapter Questions

Problem 4E: Consider the following thoughts of a manager at the end of the companys third quarter: If I can...

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ABC Ltd has incorporated a bonus plan that rewards the board of directors (executive members) by providinga bonus of 3 percent of reported profits. This is an Accounting-based incentive that has the advantage whichthe accounting results may be based on subunit or divisional performance."A well-informed labour market will motivate management to work to maximize the value of its firm.Underperformance might lead to dismissal and, if the labour market is efficient in disseminating data, a 'failed'a manager might have difficulty attracting a position with comparable pay elsewhere." (Deegan, 2020)Requirement:1) Using Positive Accounting Theory (PAT), discuss the bonus theme in general and why the bonus plan(Accounting-based) was put in place in ABC Ltd?2) Explain whether the board of directors could be motivated to try to inflate reported profits.3) Use the opportunistic perspective of PAT to explain the potential for managers to manipulatecorporate disclosure.
Discuss the advantages and disadvantages of the following forms of managerial compensation in terms of mitigating agency problems, that is, potential conflicts of interest between managers and shareholders.a. A fixed salary.b. Stock in the firm that must be held for five years.c. A salary linked to the firm’s profits.
Which one of the following represents the best effort to reduce the agency problem? Select one: Increasing the salary of the company CEO every time the company opens a new store Giving senior managers bonuses consisting of shares of company whenever the company improves its production efficiency Providing company cars to all managers employed by the firm for more than one year Paying senior managers a cash bonus each year based on the number of people employed by the company
ABC Ltd has incorporated a bonus plan that rewards the board of directors (executive members) by providinga bonus of 3 percent of reported profits. This is an Accounting-based incentive that has the advantage whichthe accounting results may be based on subunit or divisional performance."A well-informed labour market will motivate management to work to maximize the value of its firm.Underperformance might lead to dismissal and, if the labor market is efficient in disseminating data, a 'failed'the manager might have difficulty attracting a position with comparable pay elsewhere." (Deegan, 2020)Requirement:1) Using Positive Accounting Theory (PAT), discuss the bonus theme in general and why the bonus plan(Accounting-based) was put in place in ABC Ltd? Please provide references for my study. Thing to include in answer: Demonstrate superiorknowledge of the theory andkey concepts. Excellentinterpretation with extensiveelaboration of relevant subtopics, appropriatelyweighted and within…
ABC Ltd has incorporated a bonus plan that rewards the board of directors (executive members) by providinga bonus of 3 percent of reported profits. This is an Accounting-based incentive that has the advantage whichthe accounting results may be based on subunit or divisional performance."A well-informed labour market will motivate management to work to maximize the value of its firm.Underperformance might lead to dismissal and, if the labor market is efficient in disseminating data, a 'failed'the manager might have difficulty attracting a position with comparable pay elsewhere." (Deegan, 2020)Requirement:1) Using Positive Accounting Theory (PAT), discuss the bonus theme in general and why the bonus plan(Accounting-based) was put in place in ABC Ltd? Please provide Harvard reference (800 words) Thing to include in answer: Demonstrate superiorknowledge of the theory andkey concepts. Excellentinterpretation with extensiveelaboration of relevant subtopics, appropriatelyweighted and within…
ABC Ltd has incorporated a bonus plan that rewards the board of directors (executive members) by providinga bonus of 3 percent of reported profits. This is an Accounting-based incentive that has the advantage whichthe accounting results may be based on subunit or divisional performance."A well-informed labour market will motivate management to work to maximize the value of its firm.Underperformance might lead to dismissal and, if the labor market is efficient in disseminating data, a 'failed'the manager might have difficulty attracting a position with comparable pay elsewhere." (Deegan, 2020)Requirement:1) Using Positive Accounting Theory (PAT), discuss the bonus theme in general and why the bonus plan(Accounting-based) was put in place in ABC Ltd? Please provide references for my study.
Employee retention is a major goal for Dynamic Thermoforming, Inc.Feedback from the employees had focused on the need for a company-sanctioned retirement program. In response, the company will be offering a 401(k) retirement program complete with a number of different investment choices, including some of the top mutual fund families. In addition, the first 3% of an employee's salary contributed would be fully matched by the company. Quentin Avery, a sales manager with Dynamic Thermoforming, decides to put 3% of his $6,000 monthly salary into an international growth fund offered through the new 401(k) plan. The current net asset value is 17.94 and the year-to-date return is plus 4.9%. How many shares will Quentin be able to purchase each month, and what was the net asset value of the fund at the beginning of the year?
Employee retention is a major goal for Dynamic Thermoforming, Inc.Feedback from the employees had focused on the need for a company-sanctioned retirement program. In response, the company will be offering a 401(k) retirement program complete with a number of different investment choices, including some of the top mutual fund families. In addition, the first 3% of an employee's salary contributed would be fully matched by the company. Quentin Avery, a sales manager with Dynamic Thermoforming, decides to put 3% of his $6,000 monthly salary into an international growth fund offered through the new 401(k) plan. The current net asset value is 17.94 and the year-to-date return is plus 4.9%. How many shares will Quentin be able to purchase each month, and what was the net asset value of the fund at the beginning of the year? Quentin will be able to purchase shares per month. (Round to the nearest hundredth as needed.) The net asset value of the fund at…
Part BABC Ltd has incorporated a bonus plan that rewards the board of directors (executive members) by providing a bonus of 3 per cent of reported profits. This is an Accounting-based incentive that has the advantage whichthe accounting results may be based on subunit or divisional performance."A well-informed labour market will motivate management to work to maximise the value of its firm. Underperformance might lead to dismissal and, if the labour market is efficient in disseminating data, a 'failed'manager might have difficulty attracting a position with comparable pay elsewhere." (Deegan, 2020)Requirement:1) Using Positive Accounting Theory (PAT), discuss the bonus theme in general and why the bonus plan(Accounting-based) was put in place in ABC Ltd?2) Explain whether the board of directors could be motivated to try to inflate reported profits.3) Use the opportunistic perspective of PAT to explain the potential for managers to manipulate corporate disclosure.
Several managers in your company are experiencingpersonal financial problems and have asked that yourcompany switch from LIFO to FIFO so that they canreceive bigger bonuses, which are tied to the company’snet income. How would you respond to this request if youwere the company’s chief financial officer (CFO)? Wouldsuch a switch help the managers? Who could it hurt?
You recently joined ABC Limited, a small company holding a leading position in an embryonic market. You notice that your boss is very optimistic about the company and argues that ABC Limited's future is ensured. Your boss validates his argument by providing the following reasons. • ABC Limited has sixty percent share of the market due to the lowest cost structure, and • The company has the most reliable and highest-valued products. Required: You are required to write a memo to your boss outlining why the assumptions posed might be incorrect.
ABC Ltd has incorporated a bonus plan that rewards the board of directors (executive members) by providinga bonus of 3 per cent of reported profits. This is an Accounting-based incentive that has the advantage whichthe accounting results may be based on subunit or divisional performance."A well-informed labour market will motivate management to work to maximise the value of its firm.Underperformance might lead to dismissal and, if the labour market is efficient in disseminating data, a 'failed'manager might have difficulty attracting a position with comparable pay elsewhere." (Deegan, 2020)Requirement:1) Using Positive Accounting Theory (PAT), discuss the bonus theme in general and why the bonus plan(Accounting-based) was put in place in ABC Ltd? Demonstrate superiorknowledge of the theory andkey concepts. Excellentinterpretation with extensiveelaboration of relevant subtopics, appropriatelyweighted and within theprescribed word count.Demonstrated in-depthunderstanding andapplication…