Week 2 Accounting 2

Week 2 Accounting 2 - Which Kind of Incentive Plan Would...

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Unformatted text preview: Which Kind of Incentive Plan Would You Recommend? Buzzyear Company is considering starting an employee incentive plan. One possibility is to make the plan a bonus plan in which employees receive bonuses based on the reported net income of the company. Another possibility is to give employees options to buy the companys stock. You are an expert in accounting and have been asked to evaluate these two types of plans, both in terms of the practical advantages and disadvantages of implementing each type of plan and in terms of the impact on Buzzyears reported net income. First we will look at the bonus based on net income. The advantages of this type of plan are that the employees feel like they are a part of the companys profit and would inspire them to work harder. The company could set a goal for the employees to hit and by doing this it would allow them to work harder and something to look forward to at the end. The disadvantage of this is one of the things that you see happening now, owners or CEOs paying things that they dont need example a private jet which would...
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This note was uploaded on 05/29/2011 for the course EC 2011 taught by Professor Johnson during the Spring '11 term at FIT.

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