Copyright © 2015 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. What contributed to the increase in Caterpillar’s earnings per share in 2014? Original blog posting (October 1, 2015)
Copyright © 2015 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Caterpillar Inc. Largest manufacturer of earth-moving machinery such as tractors, graders, excavators, and other heavy equipment Revenues in excess of $55 billion for ,233 employees globally
Copyright © 2015 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. EPS increased in 2014 Reported diluted EPS of $5.88 in 2014, compared to $5.75 in 2013 Company attributed increase to better performance in several areas Caterpillar’s revenues, operating profit, net income all declined in 2014
Copyright © 2015 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Other facts from 2014 CEO year-end bonus based on overall company performance and changes in EPS CEO is Chairman of the Board and the Board approves the CEO’s compensation package CEO received a $2 million bonus for 2014 Company increased number of treasury stock shares in 2014 by over 31.6 million shares
Copyright © 2015 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question 1 What effect do you think the increase in treasury stock shares had on Caterpillar’s EPS change in 2014? Explain.
Copyright © 2015 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question 2 Based on the information above, what effect do you think the company’s performance had on the CEO’s year-end bonus for 2014? Explain your answer.
Copyright © 2015 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question 3 What potential conflicts of interest can you identify in the determination of the CEO’s compensation package? How might these conflicts be managed or eliminated?
Copyright © 2015 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Question Recap 1.What effect do you think the increase in treasury stock shares had on Caterpillar’s EPS change in 2014? Explain. 2.Based on the information above, what effect do you think the company’s performance had on the CEO’s year-end bonus for 2014? Explain your answer. 3.What potential conflicts of interest can you identify in the determination of the CEO’s compensation package? How might these conflicts be managed or eliminated?
Copyright © 2015 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. Thanks to Dr. John Dexter Note: This article is a special guest post written by Dr. John Dexter, Jr., CPA, CGMA, Associate Professor, Edinboro University, Thanks, John, for the
Copyright © 2015 by Dr. Wendy Tietz. This work is licensed under a Creative Commons Attribution- NonCommercial 3.0 Unported License. For additional news stories to use in the accounting classroom, see the Accounting in the Headlines blog at Related video resources can be found at Questions or comments? Contact Dr. Wendy Tietz at