In a recent Schedule 14A filed with the SEC, the Compensation Committee of the Tootsie Roll board of directors furnished the information below on executive compensation.
Executive Compensation Policy: The program is comprised of base salary, annual cash incentive bonuses, annual awards under the Company’s CAP, split-dollar insurance plans, and pension, profit-sharing, and excess benefit plans generally available to employees of the Company. The Board of Directors believes that this program will lead to increased share holder value on a long-term basis.
Base Salary: The Board of Directors annually reviews each executive officer’s salary. The Board considers the following with respect to the determination of an individual executive officer’s base. . . . The Board of Directors 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: The annual CAP award and split-dollar life insurance program are principally designed to provide an incentive to executive officers to achieve both short-term and long-term financial and other goals, including strategic objectives. These programs are also designed to provide an incentive for the executive to remain with the Company on a long-term basis. These awards are determined by the Board of Directors based on the performance of the Company and the executive’s contribution to the growth and success of the Company.
The Board of Directors considers both achievement of strategic objectives and financial performance measures in determining compensation levels. The following measures of Company performance were considered in the determination of bonuses and awards:
• Earnings per share
• Increase in sales of core brands and total sales
• Return on assets
• Return on equity
• Net earnings as a percentage of sales
• Performance in accomplishing successful acquisitions
• Compliance with the requirements of the Sarbanes-Oxley Act, including the documentation and assessment of internal controls
• Other strategic objectives that may be determined from time to time
The Company has no stock options or other stock-based compensation.

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 Tootsie Roll’s executive compensation categories listed above, identify the design choices made by Tootsie Roll’s board of directors in constructing that component of the company’s management compensation plan.