2 question (20%) The management of Seligman Manufactoring has decided to tie employee compensation to EVA performance of the firm. The firm's CFO, Virginia Whitten, is to make a presentation to the CEO and board of directors illustrating how the program will work under both an unbounded and a bounded plan for awarding incentive compensation for a typical plant manager. To illstrate two plans, Virginia has chosen to use the compensation for a typical plant manager. Under proposed compensation plan, a plant manager would receive a base pay level of $100 000 plus incentive pay equal to 20 percent of this base if the firm hits its EVA performance target exactly. Required. a Calculate the plant manager's incentive pay and total compensation for actnal EVA performance of S15 000 000; 3 20 000 000; and $30 000 000if the target level of EVA performance is set at $20 000 000. b. Now estimate the plant manager's incentive pay and total compensation for the same three level of EVA performance and target EVA but with a bounded incentive pay system that has a floor equal to 80 percent of the target performance level and a cap at 120 percent. What are the incentive effects for the plant manager of placing the floor and cap on target performance when determining the incentive pay? c What plan (unbounded or bounded) would you recommend to Seligman Corporation and why? Given: Base pay Incentive % S 100,000.00 20.00% EVA Performance $ 20,000,000.00 a. Unbounded incentive plan Scenario A Scenario B Scenario C Actual EVA Performance $ 15,000,000 $ 20,000,000 S 30,000,000 Plant Manager Compensation Base pay Incentive pay Total compensation b. Bounded incentive plan (80/120) Actual EVA Performance Scenario A Scenario B Scenario C $15,000,000 $20,000,000 $30,000,000 Plant Manager Compensation Base pay Incentive pay Total compensation