Unformatted text preview: greement over the percentages of shared of profits and the forms of distribution (cash or deferred) of profits between company and employees
Annual variations and possibility of no payout due to financial condition of company
Maintaining motivational connection of profitsharing to performance of employees Enterprise Incentive Plans Enterprise Incentive Plans (cont’d) Stock Options Granting employees the right to purchase a specific number of shares of the company’s stock at a guaranteed price (the option price) during a designated time period.
The value of an option is subject to stock market conditions at the time that option is exercised. Enterprise Incentive Plans Enterprise Incentive Plans (cont’d) Employee Stock Ownership Plans (ESOPs) Stock plans in which an organization contributes shares of its stock to an established trust for the purpose of stock purchases by its employees. The employer establishes an ESOP trust that qualifies as a taxexempt employee trust under Section 401(a) of the Internal Revenue Code
Stock bonus plans are funded by direct employer contributions of its stock or cash to purchase its stock.
Leveraged plans are funded by employer borrowing to purchase its stock for the ESOP. Employee Stock Ownership Plans
Employee Stock Ownership Plans
Rewarrds and Riisks off ESOPS
Rewa ds and R sks o ESOPS Advantages
Disadvantages Retirement benefits
Retirement benefits Liquidity and value
Liquidity and value Pride of ownership
Pride of ownership Single funding basis
Single funding basis Deferred taxes
Deferred taxes Not insured
Not insured Summary and Conclusions Payforperformance: many challenges
Meeting the challenges requires planning Payforperformance at four levels: Individual, group, plant, organization wide If PfP plan becomes entrenched Should be part of larger compensation system
Should fit with overall strategic plan of org. Employees will expect them regularly PfP for executives and salespeople requires additional thought...
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- Fall '07
- incentive plans