Brooke Remming is the Chief Executive Officer of Dundem Corp. The board of directors has agreed to pay Brooke a salary of $400,000 plus a 15% bonus if the companys pretax income increases by at least 10% from the prior year. In the prior year, Dundem reported pretax income of $3,000,000. In the final week of the current year, Brooke projects that pretax income will be $3,250,000. While this is a nice increase over the prior year, she realizes that the increase is below the 10% required for her bonus. Brooke has devoted many years to the company and feels that the company has had another successful year thanks to her efforts and good decisions. As one example of a good decision, Brooke noticed earlier in the year that the companys stock price had fallen to $42 per share. She felt that price was too low, so she used some of the companys available cash to purchase 10,000 shares. The current price has risen to $50 per share, and she is considering whether to sell the stock. She calculates that the company will make a profit of $80,000 (= 10,000 shares $8 increase per share) on the sale, and she would include the gain in pretax income. She feels this profit is possible only because of her good intuition, so it should be used in calculating whether she gets a bonus.

In your opinion are there other areas in which to spend the money mentioned the case? If so, what areas might this be? Is it ethical for the president to be directly compensated based on the companys performance each year? Why or why not?