Creating a hypothetical company and preparing a Plan Document (two pages suggested) for an Company-wide
Annual Incentive Plan. The reading on How to Design an Annual Incentive Plan will guide you through the key
points for this assignment.
You will need to determine and document the following:
Eligibility and targeted annual incentive opportunity
Two or more performance measures and percent weight
Desired performance period
How the plan will be funded
Desired payouts at threshold (minimum), target, exceeds target, and maximum
What is the definition of eligible earnings
How payouts are calculated
What is the timing of payouts
The required approval prior to implementation of the payouts under the plan
When designing a plan document for a company-wide plan, it is important to ensure the document carefully
addresses the plan rules and eliminates the chance for over- and under-payments as defined by the plan.
Avoid vagueness and keep the plan rules clear and concise.
Sample Solution
