Targaryen Corporation is a large, multi-national organization headquartered in the city of Mereen. The company has extensive operations in many countries, and is traded publicly on several stock markets worldwide. Targaryen has a complex compensation plan for its executive managers. Following are some of the key features of Targaryen's executive compensation plan: Company executives are paid a base salary for the year. Executives are eligible for a bonus, provided that net income reaches a certain pre-determined amount, which is set as part of the budget process each year. A portion of the bonus is based on the net income of the company, adjusted for unusual and non-recurring events. A portion of the bonus is based on comparison of Targaryen's net income for the year to other companies in the same industry; this portion of the bonus is paid if Targaryen's net income is among the top 20% of companies in the industry. A portion of the bonus is based on the market price of the company's bonds, and a smaller portion is based on the market price of the company's shares. Executives are required to budget a minimum of 28% of their total operating budget every year to research and development expenditures. All company executives are required to hold shares in Targaryen, and are required to keep the shares for a minimum of three months in the event of leaving the company. The entire compensation package is reviewed every three years by the Compensation Committee, a sub-committee of Targaryen's Board of Directors. REQUIRED: Using the concepts of accounting theory, analyze the executive compensation plan described above. (9 Marks)