The Pro-Forma Financial Statements, as can be seen in Appendix F, show the results of the alternative strategy for IBM as compared to the company remaining on their current course of business. One of the important moves for IBM under the new strategy is to bring new leadership into the company. Their current CEO, Rometty, has a hefty salary, and also stock options that are potentially worth more than her salary according to Melin (2017). Stock options is a common way companies can add compensation, without adding to the bottom line because of the way they are valued. While this method is within acceptable standards according to GAAP, Rometty’s issuance of options, and the way the board compensation committee used a variety of methods for their valuation has raised many eyebrows, especially after years of poor performance by the company (Melin, 2017). In the alternative strategy for IBM, Rometty would be relieved of her post as CEO at IBM. What can be viewed through the Pro-Forma Financials after taking this action in 2017, is that IBM will experience savings in their Selling and Administrative Expense as her successor would not come in at the excessive salary that she was collecting. According to Merlin (2017), Rometty’s …show more content…
Stock warrant buybacks do not hit the expense on the income statement, but can produce a tax savings for the company as can be seen on the 2017 Pro-Forma statement. These warrants will be discounted and also through negotiated settlement, bought back over a three-year period. Also seen on the comparable Pro-Forma Income Statement, when left as is, IBM continues to experience revenue and profits due to the drag of the continuing business on the company, leaving investors with a virtually flat net income
Therefore, the additional compensation cost $3 per share should be recognized in the 2017 by
There is a memo outlining the accounting treatment of the stock options that has been sent to the SVP of Finance, copying the CFO, external auditor, and the Tax Manager. This memo summarizes the accounting requirements and disclosure requirements for the Company’s stock option plan adopted in Q3, 2009. It also identifies the model used for valuation of the options and where the parameters are derived from.
A strong healthy dog is pulling a wagon of a pretty bag of dog food that looks healthy and tasty. The dog food sets perfect and looks great in the wagon. The little puppy is pulling this big wagon of dog food up a steep winding road, to show his strength from eating Beneful dog food. The wagon with the dog food in it says “Incerdibites Bring out the incredible in your small dog. The advertisers attended audience is anyone who owns a small dog. The ad also says “it’s not the size of your tail it’s how you wag it. That statement is saying even though it’s a small puppy. It’s how they wag it by being happy if they eat the right dog food. This ad uses a lot of detail and color, which really makes it stand out. They use a very pretty back ground setting very dark green grass, a dark blue sky, with a pretty yellow sun, and clouds, a very pretty tree that’s very colorful and destruct! The ad really sticks out by all the detail and color. The advertisers are trying to show if your little dogs eat Beneful dog food, they can pull this wagon up this steep road too and they will be top of the l...
The Accounting Principles II portfolio project helped me become familiar with accounting practices used to complete routine financial tasks. This course helped me learn how to complete routine business transactions, discover and explain financial issues in companies and create and manage ledgers for employers. The Accounting Principles II portfolio project taught me how to manage companies’ journals, income statements, cash flow statements and closing statements in ledgers. The Bryant Stratton Online college program outcomes helped me learn about merchandising laws, rules and approaches used in corporations. These outcomes helped me learn and distinguish practices used to create, track and manage product inventories when I am completing tasks
The case begins with an individual shareholder, Margarita Torres, who first purchased shares in 1997 and who is trying to evaluate the operational performance of the business in order to make a decision rather or not purchase more shares
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.).
...nt lies In the Investors, Bollenback should address the shareholders directly of the impending situation. It would be important to make sure they know that managements incentives are not necessarily the same as theirs, as can be seen by the lack of executive ownership at ITT. Investors must know about the haphazard changes management has taken in recent in order to improve their stock price. ITT management cited the interests of shareholders and ITT employees interests as reasons not to accept a bid, yet they recently cut 125 jobs, over half of their headquarters. Hilton has a plan to Increase value to shareholders though better capital structure, improved cash flows, and synergistic cuts. Additionally, they should be aware of the window of opportunity regarding the decision created by the alignment of management’s ending terms, as well as any other timing issues.
CEO compensation has been a heated debate for many years recently, and it can be argued that they are either overpaid or that there payment is justified by the amount of work they do and their performance. To answer the question about whether CEO compensation is justified it must be looked at by the utilitarian viewpoint where the good of many outweighs the good of one. It is true that many CEO’s are paid an exorbitant amount of money; however, their payment is justified by the amount of money that they bring back to the company and the shareholders. There are many factors that impact the pay that the CEO receives according to Shah et.al CEO compensation relies on more than just the performance of the CEO, there are a number of factors that play a rule in the compensation of the CEO including the fellow people who help govern the corporation (Board of Directors, Audit Committee), the size of the company, and the performance that the CEO accomplishes (2009). In this paper the focus will be on the performace aspect of the CEO.
When hired, both executives were offered stock incentives and bonuses for meeting sales quotas each quarter. Fraud Risk Fraud risks associated with Legato were rooted in being listed on a stock
The Return’s primary message can be understood through the divergence of the film’s initial scenes with the ambiguous and enigmatic ending that left me riddled with interior question. At first glance, the film seems to fit into the category of a psychological thriller, but as the film progresses, it becomes apparent that it acts as a metaphor for man’s inherent need for a means of self-definition. Furthermore, the Return was a breath of fresh air in that it exemplified an ambiguous and complex narrative rather than fitting into the stereotypical plotline that seems to define recent movies as ultimately having a happy ending.
For many years, IBM succeeded in holding a very good market position. In fact, the company achieved a very high market share and huge profits. However, this situation did not last forever. In 1990, IBM experienced its first quarterly loss of $2billion due to some unexpected accounting charges. However, revenues increased from $62.7 billion in the previous year to $96 billion. In 1991, the c...
This assignment is concerned with your understanding of the key issues relative to portfolio analysis and investment. In completing this assignment you are to limit your scope to the US stock markets only. Use the Cybrary, the Internet, and course resources to write a 2-page essay which you will use with new clients of your financial planning business which addresses the following issues and/or practices:
... firm can attract qualified management without causing an influx in operational costs (wages), if portions of employee compensation were to be replaced with stock options; adjusting options with company performance. If accomplished in this manner, every employee would be concerned with how well the company was doing financially. I also recommend that Chuck Lacy find non-financial arguments and data which justify the recruitment of top managers in the marketing and production departments. In addition, Ben & Jerry's could counter employee turnover by establishing new techniques in the recruitment and interview processes to detect candidates who do not share values consistent with those of Ben & Jerry's.
Trimming fat and reducing management layers is inevitable. However, boosting shareholder wealth by stepping on the stakeholders is immoral and unethical. While it is hard to say definitively what the right answer here was, we can examine some of Kidder’s principles of resolving ethical dilemmas to evaluate the decisions made. For example, ends-based thinking, which refers to doing what is best for the masses, was clearly not accounted for in this decision making process. Shareholders and senior management seemed to be the benefactors in CSC’s example. Furthermore, the care-based thinking principle also seems to have been neglected in this decision making process. I would find it difficult to imagine that senior leaders contemplated their proposed behaviors as if they were the object rather than the agent, and consulted their feelings before determining that 40% of the workforce must fall into the category of not meeting expectations (Hughes et al., 2014). Overall, CSC’s decisions were clearly not entirely moral or
In conclusion, this case described a company that started out very strong, but as soon as they seen a decline in stock prices they fell apart. When the stock prices fell the CEO, Kozlowski started making poor choices, such as falsifying financial information and stealing from the business. From my observation, companies that give out large bonuses for reached goals find themselves fighting with executives that put their morals aside for