ADMS 3510 Chapter Notes - Chapter 20: Balanced Scorecard, Risk Aversion, Business Analysis
27 Apr 2019
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Document Summary
Management compensation plans: policies and procedures for compensating managers. Bonus: compensation based on achievement of performance goals. Benefits: special benefits for the employee (parking, fitness club membership) Strategic role of management compensation has 3 aspects: Designing compensation for existing strategic conditions: the compensation plan should change in response to the new strategy. During maturity, competitiveness is key as they want to attract and keep the best managers. During growth, they want to be innovative, so bonus is high. Risk aversion: reduce risk aversion by offering high salary and low bonus but must be balanced. Ethical issues: can create unethical action as managers will do what it takes to receiver bonuses (objectives of management compensation are the same as chapter 18) Base of the compensation (how it is determined: stock price, strategic performance measures or balanced scorecard. Bonus payment options: current or deferred bonus, stock options or performance shares.
