The Study on the Compensation Plans of Taiwanese Electronics Industry

• Main Authors: Tsui-O Hung, 洪翠娥
• Other Authors: Chun-Ho Chen
• Format: Others
• Language: zh-TW
• Online Access: http://ndltd.ncl.edu.tw/handle/93337912713445894021

碩士 === 國立中興大學 === 高階經理人碩士在職專班 === 96 === Employee stock bonus is one of the compensation plans typically adopted in Taiwan, especially in IT industry. In the past, this kind of payment was not recognized as the compensation cost in financial statements. This mechanism brought some niches to the companies, which might including motivating employees, making the companies more profitable and even window-dressing financial statements. However, after implementing the accounting changes including, employee bonus are recognized as compensation cost and fair value method adopted for employee stock options since 2008, this effects of these changes of accounting rules on operation are significant, especially for Taiwanese Information Technology industry indeed, enforcing the regulations gives a clear view and stops the debates of the accounting issues, and it also forces the IT industry to find a new way to keep the balance between stockholders’ equity and employee rewards. This paper focuses on the popular compensation plans adopted in Taiwanese IT industry , including the employee bonus and employee stock option, and analyzes the ratio changes of the two compensation plans based on the listing IT firms ranging from 2002 to 2006 to generate possible solutions adjusted to the new accounting rules. The research shows that the accounting change for the employee bonus from “profit distribution” to “compensation cost at fair value” will largely increase firm’s expenses and lower the profitability, which will eventually cause the firm to decrease the bonus payments and raise base salaries instead. In addition, it is foreseeable that the IT industry will stop paying large amounts of stocks bonus but increase the ratio of cash bonus payments with the adoption of the new rules.