The 2001 Towers Perrin Annual Incentive Plan Design Survey found that 62% of companies rely on three or more measures to calculate a bonus payment:
- just over a third used earnings per share,
- a quarter of the sample used revenue measures,
- slightly less used net income,
- while 14% used earnings before interest and taxes
More than half the companies adopt corporate nonfinancial measures or individual performance measures to determine awards.
The most frequently used corporate nonfinancial measures include:
- customer satisfaction,
- employee satisfaction,
- quality, and
- new product development
Nearly 70% of respondents said that they use a single criterion to determine bonus eligibility, with position in the company cited most frequently by 44%, followed by salary grade at 38%.
More than half the companies use the cost of capital as a bonus criterion.
The sample comprised 237 companies.
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