Amber, a publicly held corporation, currently pays its president an annual salary of $900,000. As a means of increasing company profitability, the board of directors increased the president’s compensation effective January 1, 2017, with a performance-based compensation program. This program increased the president’s compensation by $300,000 in 2017 and $350,000 in 2018. Her compensation under this performance-based compensation program is expected to remain at $350,000 in 2019. Prepare a letter to Amber’s board of directors that identifies the amount of compensation that will be deductible by Amber in 2019 and explains whether any changes should be made to the president’s compensation plan in 2019. Address the letter to the board chairperson, Angela Riddle, whose address is 100 James Tower, Cleveland, OH 44106.
Amber, a publicly held corporation, currently pays its president an annual salary of $900,000. As
a means of increasing company profitability, the board of directors increased the president’s
compensation effective January 1, 2017, with a performance-based compensation program. This
program increased the president’s compensation by $300,000 in 2017 and $350,000 in 2018. Her
compensation under this performance-based compensation program is expected to remain at
$350,000 in 2019. Prepare a letter to Amber’s board of directors that identifies the amount of
compensation that will be deductible by Amber in 2019 and explains whether any changes should
be made to the president’s compensation plan in 2019. Address the letter to the board chairperson,
Angela Riddle, whose address is 100 James Tower, Cleveland, OH 44106.
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