Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Whole Foods Market's Compensation Committee determines a portion of executive bonuses qualitatively. For the quantitative portion, the Committee selects from 13 performance metrics. For the

image text in transcribedimage text in transcribed

Whole Foods Market's Compensation Committee determines a portion of executive bonuses qualitatively. For the quantitative portion, the Committee selects from 13 performance metrics. For the fiscal year 2014, the Compensation Committee selected the following five quantitative performance criteria: 1. Comparable store sales growth 2. Year-over-year improvement in EBITANCE 3. ROIC 4. Year-over-year improvement in EVA 5. Positive free cash flow Source: Whole Foods Market, Proxy Statement, July 30, 2015. Comparable store sales growth represents growth in sales from stores open for the entirety of the current period and the comparison period. EBITANCE is earnings before interest, taxes, and noncash expense. Noncash expense includes depreciation, amortization, fixed asset impairment charges, noncash share-based payment expense, deferred rent, and last-in, firstout (LIFO) charge. ROIC is net income divided by average invested capital. EVA is economic value added, which is described in this chapter. Positive free cash flow is cash flow from operations minus capital expenditures. Whole Foods does not use stock price performance as a factor in determining annual cash compensation. However, the company believes a relationship exists between stock price and team members' performance, so that its compensation plan is designed to reward team members for positive stock price performance. 5. How does using a weighted-average of five performance metrics alter an executive's behavior relative to if he or she faced a single performance metric

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Institutions Management

Authors: Anthony Saunders

3rd Edition

007303259X, 978-0073032597

More Books

Students also viewed these Finance questions

Question

b. Why were these values considered important?

Answered: 1 week ago