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Non-Tech : Cendant Corporation (NYSE:CD)

CD 5.240

+2.6%

3:59 PM EST

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To: Wren who wrote (2613)	11/26/1998 2:57:00 PM
From: Jeff Lins	Read Replies (1) of 3627

Yup...It is really hard to motivate people financially (as silly as that sounds- it is true)...Bonus based on Net Income is really tricky...sounds great on paper, but like you said it can really backfire. One of my favorites is the old "writeoff from hell" commonly referred to as the "Big Bath"...Hey, if things are looking bad for the forecasted 2 years, with negligible or zero Net Income, might as well have a BIG negative net income, i.e. loss. Take the bath this year(writeoff inventories, "reorganize" etc), and voila! Next year you can't help but show a profit , and hence get a bonus based on Net Income... I swear I have never seen so many "reorganizations" and "one time" charges...

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