Term
|
Definition
Energy Expended
Results from being motivated
Amount of energy used in performing a task |
|
|
Term
|
Definition
| Measured in terms of results |
|
|
Term
|
Definition
| resulrs from interrelationships among effort, abilities, and role perceptions |
|
|
Term
|
Definition
| Personal characteristics used to perfrom. Don't fluctuate much over short time |
|
|
Term
|
Definition
Directions in which one believes he/she should channel effort on the job
Activities and Behaviors we believe are necessart to perform job our role perceptions |
|
|
Term
| designed to relate pay directly to performance ( or productivity) |
|
Definition
|
|
Term
| incentive pay plans are used along with a base______ and __________ system. |
|
Definition
|
|
Term
| what is the intent of incentive pay plans |
|
Definition
| reward above- average performance rapidly and directly |
|
|
Term
| incentive pay plans ________ employees |
|
Definition
|
|
Term
| incentive pay plans _____________ performance- reward ___________. |
|
Definition
|
|
Term
| what is an advantage of incentive pay plans? |
|
Definition
| not permanent; must be earned each year |
|
|
Term
| t/f incentives can be rewarded several times per year |
|
Definition
|
|
Term
| incentive pay plans create a more direct link with ____ and ___________________ |
|
Definition
|
|
Term
| most popular basis is whether plan applies on an individual, group or organizational level |
|
Definition
| basis for incentive systems |
|
|
Term
| ______________________ sometimes classified according to whether they apply to non managerial employees or to professional and managerial employees |
|
Definition
|
|
Term
| what is the key issue in performance mesaurement? |
|
Definition
|
|
Term
| if incentives are based on _________ employees must believe their performance and performance of others are accurately and fairly evaluated |
|
Definition
|
|
Term
| incentives must be based on what? |
|
Definition
|
|
Term
| employees must believe that there is what between what they do and what they get? |
|
Definition
|
|
Term
| employees must perceive direct relationship between own performances and subsequent rewards |
|
Definition
|
|
Term
| employees must perceive relationship between group's performance and subsequent rewards of group's members |
|
Definition
|
|
Term
| same basic requirements as group plans |
|
Definition
| organization- based plans |
|
|
Term
| individual incentives are ties to what? |
|
Definition
|
|
Term
| what level are incentives based on performance of individual? |
|
Definition
|
|
Term
| what level are individual incentives based on performance of manager's work unit? |
|
Definition
|
|
Term
| what is an advantage of individual incentives? |
|
Definition
| employees can see relationship between what they do and what they get |
|
|
Term
| what is a drawback of individual incentives? |
|
Definition
| competition among employees may produce negative results |
|
|
Term
| simplest and most common type of incentive plan? |
|
Definition
|
|
Term
| employee is paid certain amount foe every unit produced |
|
Definition
|
|
Term
| in piece rate plans the employee's wage figured by multiplying _______ of units by _____ of pay for each unit |
|
Definition
|
|
Term
| [pays one rate for all acceptable units produced up to some standard and higher rate for all pieces produced if output exceeds standard |
|
Definition
| Differential Piece Rate Plan (Fredrick W. Taylor) |
|
|
Term
| similar to piece rate plans; standard time is time it should take to complete a particular job |
|
Definition
|
|
Term
| incentives plans based on time saved reward employees with a _____ for reaching the production level in less than standard time |
|
Definition
|
|
Term
| what happens when Stephanie C Jergel is sick on HR note cards?!!? |
|
Definition
| extreme boredom!!! urg when do these end! |
|
|
Term
| if employees consistently takes loner than standard time what of two things need to happen? |
|
Definition
1. standard needs to be adjusted
or
2. Productivity should be examined |
|
|
Term
| rewards employees, at least in part, based on their sales volume |
|
Definition
| Plans based on Commissions |
|
|
Term
| pay is entirely determined by their volume of sales |
|
Definition
| Straight commission basis |
|
|
Term
| Combination of Salary PLUS Commission= _____________________+_________________. |
|
Definition
| guaranteed base salary.....commission on sales |
|
|
Term
| many salespeople work under ____________ plans. |
|
Definition
|
|
Term
| what is a advantage of plans based on commissions. |
|
Definition
| relates directly to performance |
|
|
Term
| what is a disadvantage of plans based on commissions? |
|
Definition
| things beyond control of an employees can adversely affect sales (environmental factors) |
|
|
Term
| reward based on performance but also perpetuated year after year |
|
Definition
|
|
Term
| rewars offered on a one time bases for high performance |
|
Definition
|
|
Term
|
Definition
| cash, trips, vacations etc |
|
|
Term
|
Definition
| must be earned each year; organization is not obligated over long run |
|
|
Term
| what is a drawback of individual bonuses? |
|
Definition
1. bonuses are virtually guaranteed
2. profit have been consistently high for awhile
3. recipient do not view it as based on individual performance
4.dissatisfaction if bonus is not granted for legitimate reasons |
|
|
Term
| offer cash incentives for employee suggestions that result in either increased profits or reduced costs or improved customer relations |
|
Definition
|
|
Term
| what is the key for a successful suggestion systems? |
|
Definition
| must successfully communicate how the system works |
|
|
Term
| for a suggestion system to work correctly what must the employees know/feel? |
|
Definition
| employees must believe that each and every suggestion will be fairly evaluated |
|
|
Term
| Not-for-profit group representing companies regarding employee involvement programs, including suggestion programs |
|
Definition
| Employee Involvement Association |
|
|
Term
|
Definition
| Employee Involvement Association |
|
|
Term
|
Definition
| Activities and behaviors we believe are necessary to perform job |
|
|
Term
| Incentives for Managerial Personnel are generally in the form of what three things? |
|
Definition
1. Annual Bonuses
2. Long-Term Performance Planning
3. Stock Options |
|
|
Term
| most plans provide year-end bonus based on year's performance, usually mesasured in terms of profits |
|
Definition
|
|
Term
| the most common incentive; usually based on organizational/group performance |
|
Definition
|
|
Term
| annual bonus are Still considered ______________ incentives due to key roles managers play in success of organization. |
|
Definition
|
|
Term
| typically are normally paid at the end of the year and as a ____________. |
|
Definition
|
|
Term
| managerial incentives based on attainment of certain long-term corporate financial performance goals |
|
Definition
| Long-term performance plans |
|
|
Term
| known as performance share plans or unit plans |
|
Definition
| long-term performance plans |
|
|
Term
| actual value of units is determined by company's performance over what period of time? |
|
Definition
|
|
Term
| designed to give managers an option to buy company stock at a predetermined fixed price |
|
Definition
|
|
Term
| If stock price goes up, individual exercises option to buy stock at a ___________ and realizes its profits. |
|
Definition
|
|
Term
| if stock price goes down, stock option is "____________" and manager does not purchase |
|
Definition
|
|
Term
| what are 2 drawbacks of stock options for managerial personnel? |
|
Definition
2. executive may pump up short term value of stock to increase the personal wealth
2. it dilutes holdings of current shareholder |
|
|
Term
| Stock Options: Before Tax Reform Act of 1976 there were? |
|
Definition
| qualified and non qualified |
|
|
Term
| in Stock Options: Before Tax Reform Act of 1976 they were not taxed until option exercised and in the interim treated as a _________ asset. |
|
Definition
|
|
Term
| in Stock Options: Before Tax Reform Act of 1976 what does qualified mean? |
|
Definition
| IRS approved for favorable tax treatment |
|
|
Term
| In Stock Options: Before Tax Reform Act of 1976 what is non- qualified? |
|
Definition
| subject to a less favorable tax rate but not subject to same restricitons |
|
|
Term
| what were two conditions that in Stock Options: Before Tax Reform Act of 1976 were to be met (centered primarily around these two)? |
|
Definition
1. length of time executive required to hold option before purchasing and selling the stock
2. basis for establishing proce executive paid for it |
|
|
Term
| No new qualified options created after May 20, 1976 |
|
Definition
|
|
Term
| increased period over which to hold exercised stock option for long-term capital gains tax rates |
|
Definition
|
|
Term
| All ____________ options in existence prio to the passage of the Tax Reform Act of 1976 had to be exercised before May 21, 1981 |
|
Definition
|
|
Term
| The Economic Recovery Taz Act of 1981 resulting in the creation of what? |
|
Definition
| ISO: Incentive Stock Options |
|
|
Term
| Under the Economic Recovery Tax Act of 1981 a manager does not have to pay tax until what? |
|
Definition
|
|
Term
| what are the two drawbacks of the Economic Recovery Tax Act of 1981? |
|
Definition
1. company granting options does not get tax reductions
2. because of taz ramifications, recipients ten to prefer ISOs |
|
|
Term
| Stock options often represent _________ portion of an executive’s total compensation. |
|
Definition
|
|
Term
| CEO of Capital One; Ranks #64 2008 CEO compensation = $19 million (mostly stock gains). Took no salary or bonus. |
|
Definition
|
|
Term
| resigned as Yahoo CEO in 2007 |
|
Definition
|
|
Term
| in 2006, Cendant split into 4 independent firms. One, Apollo Management has Silverman as COO (as of 2009). |
|
Definition
|
|
Term
| in 2006, resigned as CEO of KB after internal investigation found he backdated his own stock option grants to increase his pay. In 2009, indicted by a federal grand jury. |
|
Definition
|
|
Term
| last CEO of Lehman Brothers, which filed for bankruptcy in 2008. 2009: NJ governor filed suit against Fuld for state, seeks damages for fraud. |
|
Definition
|
|
Term
| still CEO of Occidental Petroleum; #2 in 2008 CEO compensation = $223 million (mostly stock gains). |
|
Definition
|
|
Term
| #1 in 2008 CEO compensation = $557 million (mostly stock gains). Still CEO (co-founder) of Oracle. 4th richest person in the world; 3rd richest American. |
|
Definition
|
|
Term
| retired as CEO from Symantec in 2009; still Chairman of the Board. Not listed in the top 500 CEO pay for 2008 |
|
Definition
|
|
Term
| in 2007, retired as CEO of Caremark (CVS). |
|
Definition
|
|
Term
| Countrywide Financial taken over by BOA. In 2009, SEC charged former CEO Mozillo with insider trading and securities fraud |
|
Definition
|
|
Term
| Options can be exercised with shares of previously purchased company stock in lieu of cash |
|
Definition
|
|
Term
| advantage of stock for stock swaps |
|
Definition
| Postpones taxation of any gain on stock already owned |
|
|
Term
| type of non qualified stock option: Executive can relinquish stock option and receive $$ amount equal to appreciation in stock price from date option was granted. |
|
Definition
| Stock Appreciation Rights (SARs) |
|
|
Term
|
Definition
| SARs holders may have as long as 10 years to exercise their rights |
|
|
Term
|
Definition
| SARs holders may have as long as 10 years to exercise their rights |
|
|
Term
| advantage of Phantom Stock Plans |
|
Definition
| Receiver does not have to put up any money at any point in the process |
|
|
Term
| What is one form of Phantom Stock PLans |
|
Definition
| Receiver can defer “phantom” stock until retirement. At retirement, holder receives accumulated shares of stock or equivalent value. |
|
|
Term
| What is the 2nd form of Phantom Stock Plans? |
|
Definition
| Receiver credited with phantom stock; after specified period of time, receiver is paid cash or equivalent shares, equal to stock appreciation. |
|
|
Term
| Gives stock shares, subject to certain restrictions, to participating managers |
|
Definition
|
|
Term
| what is a major restriction of most plans? |
|
Definition
| Shares subject to forfeiture until they are “earned out” over period of continued employment |
|
|
Term
| What is an advantage of Restricted Stock Plans? |
|
Definition
| restricted stock plans provide an incentive for executives to remain with organization |
|
|
Term
| Exercise price of option set significantly above current market price of stock, unlike usual practice of setting it at or near current market price |
|
Definition
|
|
Term
| holder realizes__________ only when market value exceeds exercise price |
|
Definition
|
|
Term
|
Definition
|
|
Term
These are options of what
1.Set at market price, but only exercisable if stock price reaches/exceeds price goal in defined period
2.If stock price does not reach price goal within stipulated time frame, option is forfeited |
|
Definition
| Performance/Price Vesting Options |
|
|
Term
| t/f it is uncommon for CEOs to be awarded extraordinarily large bonuses and stock options: even when company is not performing well |
|
Definition
|
|
Term
| CEOs in U.S., as a group, earn over ____ times as much as their employees’ average pay |
|
Definition
|
|
Term
| most stock option plans link ____ to _______________. |
|
Definition
|
|
Term
| in a sustained ____________ trying executive reward to price may be fundamentally flawed |
|
Definition
|
|
Term
If most stocks going up, stock prices often provide inaccurate measure of company’s actual strength
THIS PROBLEM APPLIES IN A SUBSTANTIAL__________ MARKET? |
|
Definition
|
|
Term
|
Definition
| Financial Accounting Standards Board |
|
|
Term
- range of equity based compensation forms must be treated same as other forms of compensations
-companies now must expense stock options just like salaries
- co. profits are lowered by value of stock options |
|
Definition
| Statement of Financial Accounting Standard |
|
|
Term
| international companies must deduct cost of stock options from corporate profits |
|
Definition
| International Accounting Standards Board (IASB) |
|
|
Term
| Trend toward special types of ____________ that relate executive rewards to actual company performance seen, including premium-priced, performance- vested options and restricted stock plans |
|
Definition
|
|
Term
| many companies have abandoned or reduced use of _______________ |
|
Definition
|
|
Term
| what are the reasons why companies have abandoned or reduced the use of stock options |
|
Definition
1. the issuing of huge compensation when stock is performing badly
2. institutional investors demanding more linkage between exec pay and performance
3. shareholder interest begin diluted
4. corporate scandals of recent years |
|
|
Term
| ________________ are reccommended where jobs are interdependent |
|
Definition
|
|
Term
| an entire organization workforce or as small as 3-4 members of a work team |
|
Definition
|
|
Term
| group incentives are based off of what? |
|
Definition
| profits or cost reductions |
|
|
Term
| Drawbacks to group incentives? |
|
Definition
1. members do not see direct relationship between individuals performance and group performance
2. size and cohesiveness
3.overly competitive groups |
|
|
Term
| accomplish tasks within their area of responsibility without direct supervision |
|
Definition
|
|
Term
-make job assignments and decide on new memebers for the work unit
-plans its own work
-performs equiptment maintence
-keeps records and obtains supplies |
|
Definition
|
|
Term
| reward all members of organization based on performance of the entire organization |
|
Definition
| Organization -Wide incentives |
|
|
Term
| the rewards size fo the organization wide incetive usually depends on what? |
|
Definition
|
|
Term
a year-end bonus fund for employees based on co. profits
Plan encourages employees to unite with management to reduce costs and increase production so bonus fund will grow |
|
Definition
|
|
Term
| 3 common organization wide incentives |
|
Definition
Gain-Sharing plans
Scanlon-type plans
Employee Stock Ownership Plans (ESOPs) |
|
|
Term
| involve remployees in common effort to achieve company's productivity objectives |
|
Definition
| Gain sharing and profit sharing plans |
|
|
Term
| All variations in gain sharing and profit sharing plans based on what two principles? |
|
Definition
1. company must be able to measure outputs
2. when employees reduce labor costs by increasing productivity they share in the savings |
|
|
Term
| other possible variations to gain sharing and profit sharing plans are? |
|
Definition
plan...
gives employees same amount
based on senority
individual performance |
|
|
Term
| U.S. General Accounting Office reports that firms with gain-sharing programs experience? |
|
Definition
1. lower turnover and absenteeism
2. fewer grievances and improves labor-mangement relations |
|
|
Term
| drawbacks to gain sharing and profit sharing plans>? |
|
Definition
-avg employee may not notice individual output related to organization performance
-exec have signifigant of their total amount compensation based on company profits |
|
|
Term
| Organization-wide incentive plan providing a bonus based on tangible savings in labor costs |
|
Definition
|
|
Term
| Most pay 75% of bonus fund to employees and 25% to company under what? |
|
Definition
|
|
Term
| any cost savings must be paid to _____ employees |
|
Definition
|
|
Term
| Organization allows employees to purchase its stock at a set price for a set time period |
|
Definition
| Employee Stock Ownership Plans |
|
|
Term
| ESOP are based on employees what? |
|
Definition
length of service
salary
profits of organization |
|
|
Term
| ESOP is established when company sets up a? |
|
Definition
| trust; inparticular a ESOT |
|
|
Term
| Acquires specified number of shares of its own stock for benefit of participating employees |
|
Definition
| employee stock ownership trust (ESOT) |
|
|
Term
| Company annually gives stock to ESOT or gives cash to ESOT for buying stock |
|
Definition
|
|
Term
| Trust borrows money to purchase specified number of shares of company stock. Generally, company guarantees the loan |
|
Definition
|
|
Term
| What are teh 3 tax advatages of ESOPs? |
|
Definition
1. org can use pre tax dollars to pay back loans
2. dividends on ESOP are deductable
3.employees can defer any capital gains until stock is distributed |
|
|
Term
| Studies show that companies combining an ESOP with employee participation in decision making enjoy |
|
Definition
1. higher sales
2. earnings growth
3. improved financials
4. improvent in performance measures |
|
|
Term
|
Definition
1. limited effect as incentive
2. possible that price stock will go down |
|
|
Term
| Linking a percentage of employee pay to certain performance accomplishments |
|
Definition
|
|
Term
| Benefits of Variable Pay? |
|
Definition
compensation tied to performance
perceive direct relationsip between pay and performance |
|
|
Term
| to make incentive plans work they must what? |
|
Definition
| be clearly communicated to employees and viewed as fair |
|
|
