Nov 9, 2018 in Research

Compensation Plan: Chief Executive Position

The focus of this paper is on the evaluation of  a personal dream job at Google Incorporated which, thereafter, provides significant rewards, compensation packages and benefit packages for this position. The paper also puts up a discussion on the importance of collective bargaining and negotiation for this position in attaining the overall goals of the company.

Dream Job Analysis

My dream job is to become a popular chief executive officer working for a multinational company. I have been holding to this dream since my childhood and I am working towards it. It is a challenging position but I can achieve this goal by means of the right skills and resources. Since I was a child I have always aspired to apply my skills in a management position, given that I have previously executed distinctive tasks in a leadership position while working with different societal groups. My dream multinational company is Google Incorporated. I have always admired this company in relation to the manner for which it was able to sell intangible products over the Internet and post immense amounts of profits at the end of every financial year.

 I managed to conduct a personal research on this company and found out that it is currently headed by Larry Page, who happens to be the CEO as well as the founder of the company. I know it might be currently challenging to occupy his position, but I have a chance to occupy the senior position in the future as the company continues to grow.

The chief executive officer is deemed responsible for leading the formulation and execution processes of a firm’s long-term strategies with an objective of maximizing the shareholders’ wealth; They are also entitled with the supervision of daily routines by the ways of making critical management decisions as well as by implementing long- and short-term plans.  They are perceived to be the liaisons between the Board of a firm and the management team and, thus, communicate with the owners on behalf of the entire management. They also communicate on behalf of a firm to the different external stakeholders of a firm like shareholders, employees, and government agencies. Most importantly, they liaise with the chairman to create agendas for the Board meetings.

As discussed above, CEOs are tasked with ensuring that the different areas of production and leadership are operating in a favorable environment that is supported with effective policy formulation and implementation strategies. Therefore, I perceive this position as challenging and I would vehemently want to pursue my career goal.

Rewards and Compensation Package for A CEO

It is important to realize that the CEO’s rewards and compensation package is deemed to be a crucial component of a given board’s responsibility for managing the firm’s executives. This package is closely connected to their respective duties in an organization.

A. Rewards and Compensation Package Sample

The fundamental goal of Google’s rewards and compensation philosophy  rests on the provision of a reasonable and competitive overall compensation package. Such policy is consistent with the market-based compensation offerings for the potential employees that demonstrate  experience and skills required to improve the performance of the organization.

It is important to note that Google’s executive compensation program is formulated to:

  • Foster the attraction and retention of highly skilled executive personnel.
  • Avail a competitive overall compensation package that is inclusive of benefits.
  • Distinctively supports a pay for performance culture through the utilization of incentives for all executive employees.
  • Strengthen the objectives and strategies of the firm by way of supporting elements of teamwork and integration.
  • Ensure that the compensation offered is fair and most importantly equitable by all means.
  • To ensure that the package is flexible enough to allow rewarding individual accomplishments as well as organizational based success.
  • Ensure that entire compensation package is easy to expound, comprehend and implement.
  • Ensure that the package adheres o the compliances of both the state and federal legislation requirements.

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1. Governance and procedures of compensation.

  1. The board of the firm has the authority to hire and compensate the chief executive officer as are required to provide a sophisticated model of leadership skills.
  2. Compensation Policy: The board of the firm holds the authority to a distinctive compensation framework for possible annual increments as well as the principles and standards required. The board is responsible for the formulation of recommendation in relation to the distribution of salary increments. The financial agenda of this committee would be responsible for the formulation of a recommendation that relates to the funding of the aforementioned annual salary increments of the CEO.

2. Duties and responsibilities of the CEO

  1. To ensure that he/she provides a leadership framework that is connected with the board for purposes of ensuring the formulation of a company’s strategy.
  2. To lead and supervise the implementation of a firm’s both long- and short-term plans that matche with the overall strategy proposed.
  3. To ensure that the firm is organized in a distinctive and appropriate manner and also staffed adequately. They should, therefore, exercise the authority to hire and terminate unnecessary staff for purposes of ensuring that the firm is able to achieve its overall strategy and plan.
  4. To make sure that the immediate expenditures of the firm fall within the proposed and authorized annual budgets.
  5. To evaluate the major uncertainties of a company and also, to ensure that these risks are being monitored and, thereafter, managed effectively.
  6. To make sure that effective internal control systems and management information are set in place for efficient production process.
  7. To make sure that efficient systems are put in place to enable the firm to execute its operations in legal and ethically right environment.
  8. To make sure that the firm is able to sustain a higher level of standards of corporate citizenship as well as social responsibility in the course of executing business.
  9. To make sure that they act as a liaison between the management and the board
  10. To ensure that they communicate diligently and effectively to the different stakeholders of the firm like employees, government agencies as well as the shareholders.
  11. To make sure that the different directors of the firm are properly informed and that enough information is availed to the existing board that would enable them to formulate and propose effective judgments. 
  12. To act on behalf of the existing board in formulating and establishing executive compensation polices and making critical decisions with respect to the compensation offered to other middle-level managers by ways of evaluating annual base salaries levels as well as individual performance analysis.

3. Compensation components

  1. Cash/ Base Salary: The CEO is entitled to a base salary of $1 million regardless of the    performance of the company within the year.  The base salary is subject to a 2% annual increment for the period between 1 and 5 years and, thereafter, a 4 per cent annual increment.
  2. Bonuses: The chief executive officer is entitled to a bonus that is closely linked to the performance of such attributes as annual revenue growth, ROE and share price appreciation. For a successful bonus, the CEO is expected to have at least led to the improvement of the aforementioned measurement metrics by about 5 per cent within any given financial year.
  3. Stock Options: The CEO is entitled to a minimum of 500,000 shares of the company that are revised each year depending with respective performances. The company holds the right to revise the CEO’s stock option values in cases of uncertain market conditions.

4. Other Compensation Perks:

  1. Daily coffee service
  2. Quartile company picnics
  3. Annual holiday galas 

B. Benefits Package for the CEO

Google Incorporated offers the following benefit package to its CEO: 

Insurance Benefits Total of $32,500; the company contribution is $27,500 while personal contribution is set at $5,000. This component is further divided into the following components;

  • Health insurance: $20,000
  • Dental insurance: $ 4,500
  • Short-term disability: $ 4, 500
  • Long-term disability: $1,000
  • Life Insurance: $2, 300
  • Flexible spending accounts: $200

Retirement Benefit that amounts to $ 35,000 and which is divided as follows:

  • Social security: $26,500
  • Medicare: $3,500
  • 401K: $5,000

Special Benefits amounting to $ 120,000, which is dived as follows:

  • Transportation benefits: $ 20,000
  • Fun Friday’s food fests: $12,000
  • Cell/Pc technology: $24,000
  • Education/training: $64,000

First, the firm provides an extensive health insurance police to its CEO. Under this condition, the firm arranges the healthcare benefit through HMO, given that they it is the most common option. The CEO is allowed to select a primary care physician who would assist in managing health care as well as other related costs by availing the CEO with effective referrals to top notch doctors that are linked to the HMO network alliances. The CEO is expected to pay a small amount of money to the doctor while the insurance company covers the rest of the sum.

Second, the dental insurance is also provided to the CEO despite the fact that it is not obligatory by law.  Thus, Google Inc. avails a partially-funded employer police where the firm pays a share of the total costs incurred that is usually in excess of 80 per cent. The CEO is expected to cover for the remainder of the costs.

Third, the flexible spending accounts are offered to the CEO to enable them to set aside a certain proportion of money on a pre-tax basis for purposes of covering basic medical expenses.  Fourth, the firm allows a 401K retirement savings plan that is focused on recruiting a competent CEO and reduces the level of possible turnover. Finally, the additional perks of the company involves vacation time that is offered at a low-cost benefit plan. 

C. Collective Bargaining and Negotiating For the CEO Position

The position of a chief executive officer is considered to be a fundamental part of the operations of the organizations. A multinational company like Google Incorporated is, thus, no exception to this development.  It is ascertained that the CEO is fundamentally responsible for leading the development as well as the accomplishment of the firm’s immediate long-term strategies to maximize the shareholder’s wealth. By working closely with the board as well as its management team, the CEO always ensures that the firm is able to establish fundamental goals and to manage its scarce resources to meet the overall goals of the firm.  When barging and negotiating for the position of a CEO with the board, I would argue the following duties of a CEO that are deemed mandatory if a company like Google Inc. is set to attain higher profits.

  • First, the CEO is responsible for ensuring that the fiduciary duties if a company are met at any given moment in time. They are expected to assume the role of a director to act in the best interest of the firm in regards to aspects of honesty and good faith towards its stakeholders.  They are supposed to utilize their respective professional skills in conjunction with contacts; experiences as well as the professional judgment optimize the short- and long-term financial performances.  This means that a firm that does not enjoy the services of a professional and skilled CEO might fail in its endeavors to optimize on the strategies proposed at the beginning of the operations. A CEO would therefore allow a firm hit targets related to the revenue growth, hiring of competent staff as well as ensuring the overall financial performance of a company.
  • Second, the board should understand that CEO provides appropriate level of leadership prowess for an organization like Google, participates in the management of organizational culture as well as in the development of a teamwork environment that is deemed necessary for the efficient production.  The CEO is important in providing effective communication of the firm’s vision, philosophies and business strategies to all workers. The CEO would also ensure that he motivates and inspires both the senior and junior employees to adhere to the firm’s values and, thus, realize its immediate vision.  This means that they are effective role models of an entire firm, given that they are able to focus on such aspects as clarity of the goals and the measurement of standards needed for attaining higher performance. 
  • Third, it is argued that a CEO is an important executive of a firm that needs competitive and slightly higher compensation and benefits package given that he is involved in intensive strategy formulation of the firm’s operations.  They are expected to create crucial long-term strategies for the firm that is focused on improving the values as well as meeting the immediate tastes and preferences of the customers, employees and other distinctive stakeholders. Notably, they set in place processes that enhance effective strategic planning. 
  • Fourth, a competitive compensation package should award to a CEO since they are directly linked to the process involved with strategic implementation. They ensure that a firm’s strategies are efficiently implemented in a timely manner to allow meeting already set strategic goals and objectives.  They possess the top notch skill of obtaining and allocating resources that are consistent with the intensive strategic goals and, thereafter, make timely adjustments in the events that market forces require a change.
  • Fifth, CEOs are responsible for the financial performance of a company. In other words they should be fairly and competitively compensated.  They are tasked with the responsibility of conducting a comprehensive budgeting process as well as monitoring the overall company’s performance against the proposed budget.  They are, thus, expected to formulate necessary annual and long-term financial goals for the firm and to supervise the achievement of these goals, and ensure they sustain the spending activities in balance with the already approved capital expenditure. 
  • Finally, the CEO is expected to identify and effectively communicate possible risks and opportunities to the existing board for their timely action.  This means that they are accountable for ensuring that effective control of operations is availed to allow for public disclosures of results. It means that they should be allowed to have a fair compensation in comparison to the other employees of a firm.

In conclusion, it can be seen from the discussion above that the role of a CEO is fundamentally necessary and, thus, should be fairly compensated at all times. The CEO is responsible for the overall success of the firm. He or she is accountable for developing effective strategic plans and objectives, performance measurements, hiring competent staff as well as ensuring that the management team and the board are at par in regard to the internal information. Therefore, there benefits should be fairly comprehensive to cover all the necessary items that are deemed effective in hiring and retaining the competent CEO for the firm.  The proposed benefit items include: health insurance, dental insurance, 401K plans, transportation, short- and long-term disability funds among others. In the course of negotiating and collective bargaining for the importance of a CEO in attaining the overall goal of a firm, it is noted that the different top notch functions that they play should be fairly compensated to allow for growth and motivation of attaining annual strategic goals.

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