The incentive compensation plan of Abrams Company is bonus plan, and it calculate
accurately based on an equation, and it seems equal for all members. In addition, some
adjustments also are made associate with the performance of the managers. The performance is
measured by compare of actual profit and budget profit. However, all the measurement is associate with data, sometimes the performance will be influence by variance elements, such as,
economic environment, the demand level, material price, cost of labor, and government
policy, so the measurement need to improve in some areas. The dollar amount of corporate
bonus pool was established by a fixed formula linked to company earning per share. This
incentive compensation plan can be considered as a reward system. Using this method the
company can increase or maintain motivation.