Premium Essay

Executive Compensation Case Overview

In: Business and Management

Submitted By alexluko
Words 256
Pages 2
Retail grocery sales represent a significant portion of the U.S. economy. In 2006, grocery stores in the U.S. generated $900 billion in sales. The industry is highly competitive, with companies operating on low gross and net margins. As a result, grocery stores are generally under significant pressure to reduce their operating costs in order to remain profitable. For the last several decades, the grocery industry grew roughly in line with gross domestic product and was considered a mature industry. In order for companies to succeed, they needed to find effective strategies to steal customers from competitors. Many sought to differentiate themselves through store format, store location, product mix, ancillary services, or quality of customer service. Strategies, however, could easily be imitated by competitors, putting grocery store chains under constant pressure to innovate and remain efficient. In general, growth required expansion into new store locations. Because most markets are already saturated with incumbent players, growth came through acquisition. The retail grocery industry is capital intensive, requiring significant investment in new stores and store models. Companies that failed to grow often went bankrupt or were acquired. Additionally, as a low-cost provider and the dominant retailer in the U.S., Wal-Mart’s presence in the grocery industry added to the pressure on all other providers to differentiate their offerings and develop new strategies to survive. This case explores executive compensation at four retail grocery stores: Safeway, Kroger, Costco, and Whole Foods. Consideration is given to each company's strategy and market position and corporate governance

Similar Documents

Premium Essay

Marketing Compensation

...Critically discuss the claim in the above mentioned passage that the most significant trend is the move away from guaranteed compensation to performance related compensation. What are the implications to the organization’s human resource management effectiveness? 3 Performance-Based Remuneration: 3 Guaranteed Variable Salary 4 From guaranteed compensation to performance related compensation. Why? 4 b) Provide a concise overview of how an organization can ensure that its compensation strategies are able to support it strategic objectives 5 • Increased skill and flexibility in the workforce 5 • Reduction in traditional demarcations 5 • Increased efficiency 5 • Tangible benefits for workers in return for changes in working practice. 5 c) Provide a set of arguments to support the view that executive pay should be linked to company performance 6 d) What are the advantages of linking employee pay to performance? 6 Provide a 'felt fair' system of rewarding people according to their contribution 6 Higher performance within the organization may result 7 Provides a tangible means of recognizing achievements 7 People understand the performance imperatives of the organization 7 Link between extra pay and extra performance is clear 7 Conclusion 8 References: 8 Introduction In this assignment I will discuss about compensation and benefit management and many aspects of it and how they can affect an organization and about their influences. a) Critically...

Words: 2591 - Pages: 11

Premium Essay

Examining a Business Failure

...Examining a Business Failure - Tyco International Ltd Organizational behavior is defined as the study of the behavior of individuals, groups and structure and the impact to an organization. Organizational behavior uses the information gathered from this study to improve the organization’s effectiveness (Robbins, 2011). Organizational behavior focuses on a number of areas including the behavior of leaders, inter-personal communication, processes and structure within the organization, conflict and employee motivation. The behavioral disciplines of psychology, social psychology, sociology and anthropology form the basis for the study of organizational behavior. Psychology and social psychology studies the impact of conditions in the workplace and the impact to the employees’ performance. Within these sciences, learning theorists also studies the impact of change and how to reduce the challenges of change in the work environment [ (Robbins, 2011, p. 12) ]. According to the authors, sociology, and anthropology contributes to the study of organizational behavior by focusing on the relationship of employees as a group and the impact to the organizational structure. The culture and group dynamic of the employees will direct the level of motivation that in turn will negatively or positively impact the performance of the organization [ (Robbins, 2011, p. 12) ]. Psychology evaluates changes in individuals’ behavior and the impact to learning, Emotions, leadership, and decision-making...

Words: 1292 - Pages: 6

Premium Essay

Government and Legal Issues in Compensation

...| GOVERNMENT AND LEGAL ISSUES IN COMPENSATION | | | Wendy Kendall | | | Abstract The Fair Labor Standards Act (FLSA) was designed in an effort to bring the United States out of the Great Depression, but has evolved into one of the most important legislative measures to ensure fairness for all employees. This paper highlights government’s role in the compensation as well as the main provisions of the FLSA including minimum wage, overtime, record-keeping, and child labor laws. It also illustrates real and potential costs of non-compliance. Keywords: FLSA, minimum wage, overtime, child labor laws Introduction The main objective of government’s role in compensation is to assure that procedures for determining pay are fair to all. Government intervention in the compensation process includes equal pay for both men and women when performing equal or similar jobs, eliminating exploitation of children, and safety nets for unemployment and the disadvantaged. Beginning with the creation of the Bureau of Labor in 1888, government intervention has addressed many injustices, and continues to update them as new issues arise. The purpose of this paper is to track the evolution of government’s role in the compensation process, expand on some of the more prevalent laws, and highlight class action or individual legal actions against companies that violate these regulations. History Government intervention in the labor market began in 1867 when the House of Representatives...

Words: 5815 - Pages: 24

Premium Essay

Bebchuk

...Question: Discuss the main charges leveled by Bebchuk and Fried against executive compensation practices in US corporations. Answer: Bebchuk and Fried (the authors) take the following dual approach to the analysis of executive compensation contracts: 1. That, as designed by the board and shareholders, contracts help alleviate agency problems between managers and shareholders (the “optimal contracting” approach). 2. That they are a part of the agency problem itself (the “managerial power” approach). While the traditional compensation literature takes the optimal contracting view, it is difficult to see, at least with hindsight, why a competing approach did not exist for some time. After all, no contracts are complete or without side effects. It is somewhat more confounding, when one is provided an overview of the limitations of the optimal contracting approach. Specifically, the authors provide the following challenges to the approach: A. Faulty logic: If managers need contracts to optimize their behavior as agents, why wouldn’t directors? The optimal contracting approach is based on the simplistic assumption that directors are implicitly good representatives of shareholders. B. Director incentives: Directors who wish to be elected or re-elected are not likely to be adequately confrontational with the CEO because the CEO ultimately has influence over the director selection process. The hope that directors’ share ownership would lead them to overcome this hurdle is not borne...

Words: 905 - Pages: 4

Premium Essay

Term Paper on Compensation Theory and Practice (a Study Based on Ucbl)

...Compensation Theory and Practice Term Paper On Compensation Theory and Practice (A study Based on UCBL) Course code: MGT-321 Course Title: Human Resource Management Submitted to Tanzila Ahmed Course Instructor Submitted by Group Name: INNOVATORS Name ID Md. Ahadujjaman 1001010131 Faglul Karim Raihan 1001010142 Abdul Aziz 1001010127 Ashfaqur Rahman 1001010141 Gulam Sarwar 1001010060 Sec-C, 24th batch Department of Business Administration Leading University, Sylhet Date of Submission: August 26, 2011 Compensation Theory and Practice 2 LETTER OF SUBMISSION August 26, 2012 Tanzila Ahmed Lecturer of HRM Department of Business Administration Leading University, Sylhet, Bangladesh Subject: Letter of Submission. Dear Sir, It is an enormous pleasure to submit our tern paper titled “Compensation Theory and Practice” assigned as a requirement of our course related. In preparing this assignment we have acquired much knowledge about compensation. We have tried our best to furnish the assignment with relevant data, which we had to collect from online and related journal. We hope this assignment will help the organization sector to gather some insights on the windows to do further studies in this aspect. We would like to convey our tributes to you and thank you for giving us the opportunity to work on this topic. Your queries in this aspect will highly be expected. Thank you Sincerely yours Faglul Karim Raihan ID: 1001010142 Md.Ahadujjaman ID: 1001010131 ...

Words: 8745 - Pages: 35

Premium Essay

Problem Set 1

...Problem Set #1 Date 09/22/2015 Sayantani Nandy 1. Sign into Bloomberg and check IBM's page (IBM US Equity). Check Company Overview and then Company Management. Find the composition of the Management Team and the Board and check the backgrounds of the Chair as well as the top 3 longest serving board members. (a) How many of these three board members appear to be independent? (b) What are their compensations? (c) What other board memberships or executive positions do they hold? (d) Do you think having these positions help increase or reduce agency cost and help better align the interest of shareholders with management? Answer: I will start to answer the question with a table of summary: IBM Corp Inc. Sr. No Tenure . (yrs.) 1 2 Independent Board Member CompenCurrent sation shareholding Kenneth Chenault 17.8 "Ken" Other Board/Executive Positions Company Name Title Yes / No Bloomberg Philanthropists Board Member Presidents & Fellows of Harvard Board Member College Proctor & Gamble Company Board Member No American Express Travel related Chairman services Co. American Express Co. Chairman $341,193 $ 1,031,972 BM Corp. Board Member Sidney 14.8 Taurel BioCrossroads IBM McGraw Hill Financial Mc Grawhill, Compensation and Leadership Development IBM, Executive compensation $368,724 $ 2,284,797 and management resources Name Board Member Board Member Board Member No Chairman Chairman Yes 3 Joan E. 11.8...

Words: 2087 - Pages: 9

Premium Essay

Compensation Management

...ISSUES FOR COMPENSATION AND INCENTIVES MANAGEMENT: THEORETICAL APPROACH Ramunė Čiarnienė, Milita Vienažindienė Kaunas University of Technology, Vilnius Co-operative College For most people, pay is a primary reason for working. Indeed, compensation is at the core of any employment exchange, and it serves as a defining characteristic of any employment relationship. The study focuses on critical points of compensation and incentives management. The fundamentals of a good incentive program include the elements of vision, potential, communication and motivation and can be realized if incentive promises are fulfilled – by both employer and employee. The aim of the paper is to identify the most important attributes of compensation and incentives management. Research method is the analysis and synthesis of scientific literature, logical, comparative and graphic representation. On the base of analysis, authors of this paper present the model of incentive system for positive employee attitudes and behaviors. Keywords: compensation, employees, incentives, management. Introduction Compensation refers to all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship. Pay may be received directly in the form of cash (e.g., wages, merit increases, incentives, cost of living adjustments) or indirectly through benefits and services (e. g., pensions, health insurance, paid time off). Programs that distribute compensation to employees...

Words: 2728 - Pages: 11

Free Essay

Ethics and Corporate Responsibility in the Workplacce and the World

...reputation of being socially responsible. PharmaCARE developed its brand by offering free and discounted drugs to low-income consumers and sponsoring healthcare educational programs. The company also launched community-based initiatives that focus on health care education and environmental concerns. While PharmaCARE enjoyed the fruits of its good reputation, the company’s moral fabric was unraveling into threads of greed, deceit and criminal behavior. PharmaCARE executives are a despicable bunch driven by greed as they go about their responsibilities of earning company profit. The company intends to make as much money as possible using minimal resources – even if that means ignoring their responsibility to protect their employees and the public. PharmaCARE made several important decisions that negatively impacted the Colberian nation, PharmaCARE employees, doctors and consumers. Determine the stakeholders in this scenario. The PharmaCARE executives and employees of PharmaCARE/CompCARE are the stakeholders in this case. Four stakeholders (Allen, Tom, Donna, and Ayesha) are employees of...

Words: 2572 - Pages: 11

Premium Essay

Short-Termism

...dysfunctional behavior are perceived negatively across all sectors of the economy. This report is going to define and analyze the problem in both theory and real world by the example of Lehman Brothers. Recommendations are also made to mitigate the issue. Overview of the issue In order to last, there is a need for firms to take appropriate actions to secure long-term sustainability. However, the short-term outcomes must not be precluded from consideration, if the firms at least want to survive. Therefore, both long-term and short-term goals need to be equally considered. The most important point is whether the firm can maintain the balance between long-term and short-term. The problem, so called ‘short-termism’ or ‘myopia’, arises when an organization acts in favor of short-term targets at the expense of the long-term (Marginson and Mcaulay, 2008). There are a number of reasons for the occurrence of short-termism. The first reason which causes the issue here is the frequency of financial reporting. More frequent financial reporting is considered as a solution for a more accountable and transparent accounting system. However, this solution leads to another problem for managerial accounting because it pressures companies’ executives to focus more on short-term results, which promotes short-termism (Gigler, Kanodia, Sapra and Venugopalan, 2014). Investors and shareholders are the other reason for the problem. This is because impatient traders only evaluate a firm based on short-term...

Words: 1520 - Pages: 7

Premium Essay

Audit Basics

...Overview The success of any companies’ internal audit function weighs heavily on the direction and tone provided by its Chief Audit Executive that operates within the organization on a daily basis. Stakeholders in a business must have confidence that the CAE of the internal audit function will work to make certain the interests of the stakeholders are top priority. The primary goal of the CAE is to sustain a level of objectivity and independence that ensures that public trust is not lost and value is consistently being added to the entity. Even with well-defined roles and responsibilities, issues may arise within management that requires attention and actions to be taken. Pat Goodly is an example of how even in a tightened governance structure, there still lies problems that should be addressed. Position in the Organization The internal audit function is created by the board of directors and the audit committee. Each individual that operates within the internal audit function including the CAE has their roles and responsibilities defined by the audit committee and board of directors. The primary purpose of the audit committee is to oversee the organization’s internal audit function, which plays a vital role in the aspects of corporate governance and risk management. The reporting environment in which the CAE operates in is discussed in Standard 1110. IIA Standard 1110 states that “the chief audit executive must report to a level within the organization that allows the internal...

Words: 1006 - Pages: 5

Free Essay

Leg 500 Assignment#2

...ethical and well-run company which produces high-quality products that saves millions of lives and enhances the quality of life for millions of others. In this hypothetical scenario the following will be discussed. The stakeholders will be indentified. Analyze the ethics of PharmaCARE’s treatment of Colberia’s indigenous population and PharmaCARE’s rank-and-file workers versus that of its executives. Determine whether Allen could legally fire each of the three workers; Donna, Tom, and Ayesha. Suggest steps he should take to minimize the risks to his department and the company. Determine the whistle blowing opportunities, obligations, and protections that could benefit Allen. Assess PharmaCARE’s environmental initiative against the backdrop of its anti-environmental lobbying efforts and Colberian activities. Examine if this renders the company’s purported environmental stewardship better or worse and if the company’s public stance should carry an obligation to be a leader in environmental matters. Analyze the original purposes of and the changes to Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Determine which provision(s) of CERCLA apply to PharmaCARE in the scenario provided Stakeholders are those individuals and groups that have an investment, share, or interest in an organization. In this scenario that includes PharmaCARE, CompCARE a subsidiary of PharmaCARE, Wellco a large drugstore chain which purchased CompCARE, PharmaCARE’s management and...

Words: 2078 - Pages: 9

Premium Essay

Workforce

...Investment An Oracle White Paper September 2011 HR Analytics: Driving Return on Human Capital Investment HR Analytics: Driving Return on Human Capital Investment The Business Need for Improved HR Analytics ................................. 3 Leading Practices for Improved Organizational Performance ............ 4 HR Analytics Contributes by Driving Insights to Action ...................... 5 Addressing Information Needs through Analytic Workflows ........... 5 About Oracle Business Intelligence Applications ............................... 7 The Foundation: OBIEE 11g .......................................................... 8 HR Analytics Subject Areas ........................................................... 9 A Case Story ................................................................................... 15 Benefits and ROI ............................................................................. 17 The Value of a Pre-Built Solution ................................................. 17 Business Value Adds Up ............................................................. 17 Maximizing Success – Next Steps ................................................... 19 Conclusion ...................................................................................... 20 The Business Need for Improved HR Analytics As worldwide economic and political conditions continue to concern business leaders, their attention turns to the various levers that can foster...

Words: 7945 - Pages: 32

Premium Essay

Enron Collapse

...The Enron Collapse Enron, a high profile organization which ranked as the seventh largest company in the United States during the 1990’s consisted of approximately 25,000 employees worldwide and held revenues in the tune of over 100 billion dollars in 2000. Enron controlled about one quarter of the gas companies in the United States and also expanded into Myriad energy products during its years of operation. The company traded hundreds of products throughout the wider Continentals including South America, Asia, Europe, Australia and also the United States, and was considered to be very successful with their trading strategies. An excerpt from an article in the CRS Report for Congress entitled The Enron Collapse: An Overview of Financial Issues, Mark Jickling, (February 4, 2002), states that “the firm was widely regarded as one of the most innovative, fast growing, and best managed businesses in the United States.” However, despite all of Enron’s fame and glory, the company crumbled as a result of bad management and unethical practices. According to Donaldson & Werhane (2008), “The controls as designed were not rigorous enough and their implication and oversight was inadequate at both Management and Board levels,” (p. 313). The purpose of this paper is to discuss the Enron Collapse and explain how the virtuous manager would have responded to working for Enron. Also being discussed is what the virtuous manager is expected to do if confronted with these decisions. Unfolding...

Words: 1955 - Pages: 8

Premium Essay

Intermedia Paper

...Business Related Expenses and its Use by High Level Management Jorge Ormaza Ohio University Company Overview XYZ is an advertising and media company which is well known for the quality of work it provides to its customers. XYZ started its business fifteen years ago and since then it has quintuple its size. Starting with only ten employees, XYZ got in the media and advertising business by offering subservices to big media corporations. A few years after, XYZ increased its labor force and started providing services to the clients directly. Its main core business is providing clients with planning and buying media tools and resources in order to improve and increase its footprint in the advertising world. XYZ offers a high quality end-product which has been reflected in increase in sales by large margins among its clientele. Nowadays, XYZ provides its services to more than two hundred companies world-wide. Its main clients are internet and technology companies or, as they are called internally, blue chips. The Case At the time when I was working for XYZ, employees were able to claim transportation expenses if they worked after 8pm. This policy was a great perk for many employees since XYZ was a company that was winning new clients on a monthly basis. Therefore, the workload was quite extensive for several departments. Since I was working in the Finance and Accounting department of the company, I was able to see all business-related expenses from all the employees at XYZ...

Words: 1489 - Pages: 6

Premium Essay

Ceo Compensation

...| CEO Compensation | | | | Jade Duan | 5/12/2012 | | INTRODUCTION Over the past a few decades, executive pay has risen dramatically in the United States. As of 1960, the average CEO at a large corporation made approximately $190,000 (equivalent to approximately $1.3 million today). The 1990s saw one of the greatest wealth transfers in history, as CEO pay skyrocketed. S&P companies CEO pay went from 1993 average of $3.7 to $17.4 million in 2000 [1]. In 2010 the highest paid CEO was Viacom's Philippe P. Dauman at $84.5 million in 9 months [2]. Motorola CEO, Sanjay Jha, pay package rose to $47 million in 2011, almost four times of his 2010 pay about $13 million [3]. As CEO compensation continues to soar while workers’ pay stalls, today, the average CEO makes 411 times more than the average worker (Figure 1). The explosion in executive pay has become controversial and criticized. The idea that stock options and other alleged pay-for-performance are driven by economics has also been questioned. Figure 1. Ratio of average CEO Pay to average production worker compensation in America Observers differ as to whether this rise is a natural and beneficial result of competition for scarce business talent that can add greatly to stockholder value in large companies, or a socially harmful phenomenon brought about by social and political changes that have given executives greater control over their own pay. "Today the idea that huge paychecks are part of a beneficial...

Words: 5460 - Pages: 22