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Compensation as a Strategic Asset by Coral L. Rice, August J. Aquila

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APPENDIX2006 OWNER COMPENSATION SURVEY

Conducted byAugust J. Aquila, Ph.D. and Coral L. RiceSponsored byPCPS Division of the AICPA

2006 Owner Compensation SurveyOverall Results

What type of owner compensation system does the firm currently use? N %
Equal pay method 67 15.8
Formula method (firm uses algebraic formula to determine income allocation) 75 17.7
Managing owner decides how to allocate income 53 12.5
Compensation committee (small group of owners) decides how to allocate income 22 5.2
Executive committee decides how to allocate income 21 5.0
All owners (meet as a group) to decide how to allocate income 47 11.1
Pay-for-Performance method (objective and subjective goals are predetermined for each owner at the beginning of the year and evaluated at the end of the year)4 23 5.
Paper and Pencil method (all owners recommend a base compensation for each owner including themselves) 10 2.4
Ownership percentage method (income allocate based on ownership percentage) 28 6.6
Eat what you kill (system only rewards individual production effort) 23 5.4
Other (please specify) 55 13.0
Total Respondents 424  

 

For how many years have you been using this method? N %
1 year or less 13 3.1
2 to 5 years 81 19.6
5 or more years 320 77.3
Total Respondents 414  

 

Compared to 10 years ago, how much has your compensation system changed? N %
Hasn’t changed 185 45.2
Somewhat changed 142 34.7
Significantly changed 82 20.0
Total Respondents 409

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