QAF Company is a clothing retailer with locations in major Canadian cities. Its stock is publicly traded. In 2008 and 2009, the company€™s financial performance was less than stellar, as shown in the table below.

Operating profit margin is the ratio of after-tax operating profit divided by sales. ROA is equal to after-tax operating profit divided by average total assets. Days of A/R is the balance of A/R at year-end divided by credit sales and multiplied by 365 days.
In response to declining performance, the company€™s board of directors decided to initiate an incentive compensation plan starting in fiscal year 2010. The incentive plan provides for management bonuses based on the following formula:
Bonus = $500,000 X (Operating profit margin - 4%)
Required:
Provide plausible reasons why' the company' is performing poorly despite the new incentive compensation plan.

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2008 2009 2010 3.9% 4.8% 5.5% 4.4 % Operating profit margin Return on assets (ROA) Y/E stock price Days of accounts receivable (A/R) 4.0% 5.0% S23 $21 S16 35 50