Menghan Jiang
Xiaoyang Xu
Case Study: “Occupy Mall Street”
The answer to the #1Q:
According to the ASC 718-10-30-2: When companies grant share options to their employees, the calculations of payment (compensation cost) only depend on the fair value. This means that only fair value is useful to calculate compensation cost of OMS recognize in each year of the award’s service period.
Therefore, calculation of compensation cost:
$15*1000 (employee share options)= $15000 for four years service period
$15000/4=$3750 for each period. --- $3750 is compensation cost of OMS recognize in 2012 and in 2013.
According to the ASC 718-20-35-3: If there are some modification to share options transactions with employees, the total compensation cost should include two parts: 1. The compensation costs before modifications. 2. The incremental costs because of modifications. In
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$1500+ $3750(this figure is calculated in the above)=$5250
Therefore, $5250 is the compensation cost of OMS recognize in 2014 and 2015
The answer to the #2Q:
According to the ASC 718-20-55-94: If modifications happen after the awards have become fully vested, the additional compensation costs should be recognized on modification dates.
Refer to OMS case, if the modification to the terms of the award was made on January 1, 2017, this implies that the modified share options are immediately vested. Therefore, the additional compensation cost should be recognized in the 2017.
Based on the calculation of additional compensation from ASC 718-20-55-95:
Fair value of modified share option at January 1, 2017 $12
Less: Fair value of original share option at January 1, 2017 9
Additional compensation cost to be recognized $3
Therefore, the additional compensation cost $3 per share should be recognized in the 2017 by
ARB43, Ch.4, Par.9 ?Where evidence indicates that cost will be recovered with an approximately normal profit upon sale in the ordinary course of business, no loss should be recognized...?
Employees protested, “that supervisors should have received a reduced bonus because they were not working as hard as they are and the company might be playing with the numbers” (Beer & Collins, 2008 p.6). A beneficial system for the new Scanlon Plan is to rearranged payout count. This will help to regain trust amongst employees and management. Equity Theory stresses integrity to all compensation arrangement and if this is effectively executed, then this will resolve the mistrust issue that employees have with their management team. The rewards should not be paid on a consistent month-to-month basis, instead, on a settled proportion plan, which gives rewards "each nth time the right behavior is demonstrated" (Bauer and Erdogan, 2013, p. 112). Traditionally, this would imply that workers are paid reward each time a specific measure of cash in permitted payroll is met. “The current permitted payroll is at 38% of sales value” (Engstrom, 2008). This requires no change. Instead, when Engstrom comes to a permitted payroll of one million dollars, then 10% of that sum should naturally disbursed to workers as rewards. This tackles numerous past issues with the Scanlon
Compensation is made of a base salary (paid by the hour, work or the year; excluding overtime or bonuses), variable pay (bonuses, profit sharing/stock options which work hand and hand with the performance of the company), and benefits (to include health insurance/savings plans – 401(k), or tuition reimbursement). The traditional way of determining base pay for jobs was to compare jobs in the same industry. Now industry and market, no long work by themselves, the current thinking is more person-based that considers knowledge, skills, and competencies of the work. This, however, is best suited for high-performing environments that remain flexible in their deployment of human capital.
...ion issuable shares of Class A stock, with 322 million of them currently being issues. This equates to $32 million from the Class A stock. The Class B stock also has 900 million issuable shares, and only 70 million issued, equating for $7 million. Finally, the accumulated comprehensive loss and treasury stock equate for losses of $108 million and $1.02 billion respectively.
employee stock ownership can create a burden of long-term planning for the sustainability and repurchase program; not all employees can be able to purchase stock. According to the case, Atul believes in a total compensation between 0-10 percent based on employee’s salaries could play as a “trade-off” for a “supportive and respective work environment” (Calo et al., n.d.).
...ollowing 3 years 20% of your original stock allocation is allowed to be sold, and then in year five 30% can be sold. At any time during this period if it is deemed that the bonus's were misallocated due to poor performance the remainder can be clawed back. This gives an incentive to do what is best in the long run and should eliminate many of the poor short-term decisions.
For the most part, the value of compensation from the time of World War II (mid 1930’s – 1945) until the 1970’s did not change (Fryman 2009). Many executives are on a Pay-to-perform compensation plan. The most surprising fact is during the 1950’s ...
addition to the cost of the trip in direct terms (ticket) and indirect terms (lost earnings), a
Kunkel, J. G., & Lau, R. T. (2005). Compensation plans and the new stock option accounting rules. The CPA Journal, 75(1), 28-30. Retrieved from http://search.proquest.com/docview/212341182?accountid=32521
...ngent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss. The carrying values of financial assets and liabilities approximate their fair values due to their relatively short term nature. (cardno limited, 2013)
Basic and Diluted. Companies with outstanding stock options and other convertible securities report diluted earnings per share in addition to basic earnings per share. This treatment recognizes the potential dilution (an increase in the number of shares outstanding) that would occur if all convertible securities were immediately converted to common shares.
b. To show the proportion of your budget spent on each of the four fixed costs for your company during the year.
Formalized compensation goals serve as guidelines for managers to ensure that wage and benefit policies achieve their intended pur¬pose. The more common goals of compensation policy include to reward employees’ past performance, to remain competitive in the labor market, to maintain salary equity among employees, to motivate employees’ future performance, to maintain the budget, to attract new employees, and to reduce unnecessary turnover. It is important for the organ...
2. Should the component costs be figured on a before tax or an after tax basis?
A compensation package includes salary but also includes other non-salary benefits such as: health-care benefits, 401(k) plans, PTO (paid time off) and other perks. Businesses often utilize experienced Human Resources professionals to review, update and create salary scales and compensation packages for new hires. The total compensation package is often used as means of attracting employees who will complement the organization and should be consistently reviewed, acting as an incentive for retaining qualified staff. “Organizations that are not able to develop competitive pay scales along with strong compensation packages, face the risk of a competitor offering a more attractive package, which can result in employee turnover” (Dias, 2011, pg.