(Choosing performance standards) Caldwell Oil Field Services Company is a divi¬ sion of Langston Petroleum. Prior to the current year, the manager of Caldwell and corporate managers agreed to a target ROI for Caldwell of 13 percent. Subsequently, an incentive pay contract was executed between Jeannie Green, the manager of Caldwell, and corporate management. The contract stipulated that in the event Caldwell achieved an ROI of 13 percent, certain bonus pay¬ ments would be made to Ms. Green. Any achieved ROI below 13 percent would result in no bonus payments. At year end, the measured ROI of Caldwell Oil Field Services Company was 5 percent.

Ms. Green has approached corporate management with the following in¬ formation as the basis of arguing that she deserves a bonus payment for the year, despite the fact that her division failed to meet the stipulated 13 percent ROI.

ROI of top competitor for the year 2.7 percent Average ROI in the industry for the year —2.9 percent You have been selected to be an arbitrator between Ms. Green and Langston Petroleum’s top managers. Prepare a brief oral report in which you interpret the meaning of the additional information provided by Ms. Green.