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Incentive pay plans emphasize nonfinancial measures.

A study of executive compensation practices at 1,400 companies conducted by William M. Mercer, Inc. found many companies used nonfinancial measures in determining incentive compensation.

Thirty-five percent of the companies used customer satisfaction measures in the incentive payment formula and another 33% planned to do so. The rate of on-time, delivery of products or services was used in the programs of 33% of the companies and was being considered by 24% of those polled.

Among financial measurements, 48% of the companies surveyed examined internal financial performance (such as cash flow trends) to determine incentive payments rather than external yardsticks such as stock price movements.
COPYRIGHT 1993 American Institute of CPA's
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Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Journal of Accountancy
Article Type:Brief Article
Date:May 1, 1993
Words:105
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