Problem - Amber, a publicly held corporation( not a TARP recipient), currently pays its president an annual salary of $900,000. In addition, it contributed 20,000 annually to a defined contribution pension plan for him. As a means of increasing company profitability, the board of directors decides to increase the presidents compensation. Two proposals are being considered. Under the first proposal, the salary and pension contribution would be increased by 30%. Under the second proposal, Amber would implement a performance based compensation program that is projected to provide about the same amount of additional compensation and pension contribution for the president.
A- Evaluate the alternatives from the perspective of Amber, Inc.
B- Prepare a letter to Ambers board of directors that contains your recommendations.