The three types of Compensation and Benefits
The three types of Compensation and Benefits analyzed through this research are Shared Base Compensation dealing with stock option and restricted stock, Regular Base Compensation and Pension Plans.
Laura Santos
ACG4111/ Intermediate Accounting II
February 2014
Compensation and Benefits comes in many different forms. The major goal for compensation and benefits is to reward employees for services provided by an individual for the benefit of the organization. It’s a set of programs, aiming to achieve and attract capable workers to a particular business. Compensation and benefits also helps motivate employees towards superior performance and retaining these services for a long period of time. There is a wide range of different types of compensation and other benefits. This paper will focus on three of many, Share based compensation to include stock options and restricted stock, Base Compensation and Pension Plans. Throughout this research project; there will be observance of the accounting treatments and disclosures along with the benefits, advantages and disadvantages to employees, share holders and investors. This will allow and develop a better understanding as to why compensation and other benefits are so important to employers, employees and shareholders. There are two types of common shard based compensations restricted stock and stock options. Stock options give shareholders the right to exchange shares at prearranged prices before the dates of the stocks expire. Most of the times there is a vesting period which usually lets an employee know when they can exercise their options and how much is available to vest. Share based compensation must take into account and apply applicable laws when it comes to the accounting process. It’s up to senior management and executives to disclose security registration and regulatory disclosures to the appropriate agencies. Securities transactions must be disclosed and trading of
Laura Santos
ACG4111/ Intermediate Accounting II
February 2014
Compensation and Benefits comes in many different forms. The major goal for compensation and benefits is to reward employees for services provided by an individual for the benefit of the organization. It’s a set of programs, aiming to achieve and attract capable workers to a particular business. Compensation and benefits also helps motivate employees towards superior performance and retaining these services for a long period of time. There is a wide range of different types of compensation and other benefits. This paper will focus on three of many, Share based compensation to include stock options and restricted stock, Base Compensation and Pension Plans. Throughout this research project; there will be observance of the accounting treatments and disclosures along with the benefits, advantages and disadvantages to employees, share holders and investors. This will allow and develop a better understanding as to why compensation and other benefits are so important to employers, employees and shareholders. There are two types of common shard based compensations restricted stock and stock options. Stock options give shareholders the right to exchange shares at prearranged prices before the dates of the stocks expire. Most of the times there is a vesting period which usually lets an employee know when they can exercise their options and how much is available to vest. Share based compensation must take into account and apply applicable laws when it comes to the accounting process. It’s up to senior management and executives to disclose security registration and regulatory disclosures to the appropriate agencies. Securities transactions must be disclosed and trading of
References: Ricci, Ignacio (June 9, 2011) Human Resource Management 3 types of compensation benefits. Business Review Word Press. Retrieved February 18, 2014, from http://athanne.wordpress.com/2011/06/09/human-resource-management-3-types-of- Spiceland, J. D., Sepe, J. F., & Nelson, M. W. (2013). Intermediate Accounting (7th ed.). New York, NY: McGraw-Hill Education Moran, A. E. (2002). Stock Option Fundamentals. Employee Relations Law Journal, 28(2), 115-130. Terri Jarvis (January 2005) Accounting for Pension Schemes, Tottel Accounting Digest; Issue 27 page 14-16 Bruce Brumberg (2001) Stock Options “getting your share of the action: negotiating shares and terms in incentive and nonqualified plans”.