Asked by Fazena Jaikaran on Jun 15, 2024

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You have been asked to provide recommendations to a compensation committee in their attempts to shift the CEO's compensation into a mix of rewards that facilitates and encourages a long-term view of business performance.What foci should your recommendations take?

Compensation Committee

A subgroup of a board of directors that is responsible for setting and guiding policies related to executive and employee compensation.

CEO's Compensation

The payment and benefits package provided to the Chief Executive Officer, reflecting responsibilities and aiming to incentivize performance.

Business Performance

A measure of the efficiency, effectiveness, and sustainability of a business in achieving its goals, often evaluated in terms of profitability, revenue growth, and market share.

  • Understand the process and considerations necessary in formulating a compensation strategy.
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Willie CollazoJun 19, 2024
Final Answer :
Responses to this question will vary greatly.That said,elements of rewards associated with the proposed package should include variables such as: moving to a restricted stock option plan versus stock options; profitability and market growth targets (three to five years); employee and customer engagement scores (value of service provided to customers,and growth and development opportunities within the company); product development (particularly in industries with fast product cycles); efficiency metrics (productivity)and effectiveness (product penetration per customer); meeting corporate three- and five-year business targets (which may include many of the aforementioned variables).