Bronson Corporation recently filed the following information with the SEC regarding its executive compensation.
Base Salary: The Board of Directors annually reviews each executive officer's salary. The Board believes that the Company's primary competitors for executive talent are companies with a similar market capitalization and, accordingly, relies on a broad array of companies in various industries for comparative analyses.
Annual Incentives and Other Awards: Other incentives and awards are designed to achieve both short-term and long-term financial goals. They include performance bonuses, profit sharing, life insurance plans, and pensions. The company does not offer its employees stock options.
The Board of Directors considers the following financial performance measures in determining compensation levels:
• Earnings per share.
• Increase in sales of core brands and total sales.
• Return on investment (ROI).
• Net earnings as a percentage of sales.
Instructions
In this chapter, five design choice categories for management compensation were described (long versus short horizon; fixed versus variable bonus; stock- versus accounting-based evaluation; local versus companywide orientation; and cooperative versus competitive schemes). For each of Bronson's executive compensation categories listed above, identify the design choices made by Bronson's board of directors in constructing that component of the company's management compensation plan.