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Pepso

In: Computers and Technology

Submitted By Candicechua
Words 1591
Pages 7
CANDICE CHUA
FINANCIAL STATEMENT ANALYSIS | SECTION 1 WEDNESDAY 8 AM

1. Incentives
Similarities:
* Benchmarking compensation to similar roles in a peer group – sends signals about performance benchmark & types of businesses executives can enter into * Both incorporate long-term aspects into performance compensation plans * Both tie executive compensation to company performance
Differences

Compensation characteristics | PepsiCo | Coke | Comments | Total CEO compensation benchmark | Leading consumer product companies, selected companies covered in S&P 500 Beverage, Food and Restaurant IndicesDefinition is narrow: limits competitive space to consumer product companies, with emphasis on food and beverage | Other large companiesDefinition is broader: competes against entire universe of large companies | Has implications for businesses the companies are willing to enter into and the talent pool to recruit fromFor both shareholders and employees, Coke is more attractive. F&B may not present the best return opportunities | Emphasis on long-term compensation | Emphasis on long-term performance is much less pronounced vs Coke – principal portion is tied to both annual objectives and long-term shareholder returns | Very clear focus on long-term performance pay: majority of pay composed of long-term, at-risk pay with less emphasis placed on salary and annual incentives | Coke’s investors/employees are more likely to be focused on the long term. Lends stability to the business: make better long-term investment decisions | Salary ranges | Targeted at upper end for similar positions at comparison companies and capped at $1m | Targeted at 3rd quartile of the range for comparison group | Coke’s salary ranges are higher than Pepsi’s, comparison companies are much larger – better ability to attract and retain top talent, drive superior...

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