Describe the CEO's compensation topic that your group selected. Explain it. Define imp terms and concepts.

CEO CompensationContentsIntroductionTopic and DescriptionGoals and ObjectivesExamplesRecommendationsConclusions

Who is CEO? Chief Executive Officer The highest ranking executive in a company whose main responsibilities include developing and implementing high-level strategies, managing the overall operations and resources of a company, making major corporate decisions, and acting as the main point of communication between the board of directors and the corporate operations (Investopedia, 2003). The CEO is responsible for the success or failure of the company.

What does CEO Do..CEO - most important spokesperson for the organization Setting Strategy And Vision.Building CultureTeam BuildingCapital Allocation

History of CEO CompensationFrom 1978 to 2013, CEO compensation, inflation-adjusted, increased 937 percent, a rise more than double stock market growth and substantially greater than the painfully slow 10.2 percent growth in a typical workers compensation over the same periodThe CEO-to-worker compensation ratio was 20:1 in 1965 and 29.9:1 in 1978 which grew to 122.6:1 in 1995, peaked at 383.4:1 in 2000, and was 295.9:1 in 2013Define: CompensationCompensation in general terms means an amount paid in cash to the employees for their work performed.Forms of payment: sales commission, bonus, profit sharing, overtime pay, Or non-cash payments: company paid accommodations, a company financed car and other non cash taxable items.

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Define: CEO's compensationCEOs Compensation comprises of:Base salary, Bonuses, Incentives such as Stock Options,A guaranteed severance package in the instance of employment termination for reasons other than cause,A signing bonus for coming onboard,Income protection guarantees in the event of a sale, public stock offering, or other liquidity event,- (Heathfield, 2015) CEO's pay blow up in last two decades

- (Forbes- CEO Compensation, 2012)CEO pay kept increasing each passing yearAn even steeper increase is evident since 1990

8 How much CEOs earn an hour?

- (Krantz, 2015) Ratio: CEO-to-Worker Compensation

- (Davis & Mishel, 2014)Question to be answered..Are The United States CEOs paid more than they deserve?OrDo CEOs really deserve higher compensation as they have enormous talent?Goals and objectivesSet proper time horizons for executive accomplishment: short term/mid term/ long-term.Tilt compensation for level of responsibility: a. High level 40% fixed salary/60% future appreciation or 30% fixed salary/35% bonus/35% future appreciation.Performance measures includes: a. financial measures b. corporate citizenship/Corporate social responsibility measures c. consider company stock price against benchmarks from peer companies, d. industry or other relevant comparable, not just increase in market price e. consider if company is operating in a down market or an upmarketImportanceThe value to the organization depends on the CEO performance; pay for performance is the important aspect of many companies for their explanation of the compensation plan.CEO is the only position within the company, who has the straight line of sight and more exposure.People with great skills and responsibilities, who are not afraid to take extreme decisions, and the people who can fill-in this role (CEO) are very limited, which is why market determined these people are worth a lot of money to their companies.Success of the company, and keeping the stockholders happy is the most important part, which comes through implementing organizations vision and leading the development for the overall company.

PurposePresence of CEO makes the company more like a driving force to the success, which increases the value of the company, based on his decisions and commitment to the company growth market.

It increases the companies stock value, making positive and effective decisions, will have its own reward by having a huge slice of the profit.

HR Department and Management planThe compensation and benefits processes introduce the transparency into Human Resources and CEOs for the achieved performance.It defines the compensation strategy, sets the transparent and simple compensation policy.The department monitors the external job market and optimizes the personnel expenses budget of the organization.It defines the general rules for the extraordinary payments, bonus schemes applied in the organization and introduces general other compensation policies like the Relocation Policy, Short-Term Assignment Policies, Benefit Car Policies and other.Finally approves the compensation adjustments for the CEO , as recommended by the subcommittee assigned to review total compensation, in consultation with Human Resources.

What difference does it make ?The basic philosophical issues to consider in forming the foundation of compensation strategies include:

What constitutes good performance ?Does management make a difference in performance ?Does compensation make a difference in getting good management ? How much, if any, of management compensation should be at risk ?

Pros & ConsPros : Corporate compensation committees justify big bonuses as a way to reward superior performance. Other reasons for defending high levels of compensation include the following:Executives are responsible for large amounts of capital.Business competition is pressure-filled and demanding.Good executive talent is in great demand.Effective executives create shareholder value.Others justify high compensation as a fact of business life reflecting market compensation trends Cons : Big bucks come with big headachesSome critics attack the size of incentive bonuses and the often vague criteria on which bonuses are based. Others point out that some executives receive record bonuses while their organizations are in financial trouble and employees are asked to make wage and benefits concessions. Large bonuses can also serve to raise prices, ultimately leading to inflation and higher unemployment.Another criticism of some executive incentive plans is that the time period for which executive performance is measured is often too short and the rewards are too large. This encourages executives to focus on short-term items such as quarterly earnings growth and to neglect longer-term items such as research and development and market share. In the long run, therefore, stockholders may not receive a return equal to what they might have earned from other investments, and they might look for a better investment with a different organization.

Example: CEOs Compensation (2002 -2003 )Below gives the total compensation for the investment bank CEOs in 2002 and 2003 Citigroup, Lehman Brothers and Bear Stearns have CEOs who are among the top 10 highest paid

Example: CEOs Compensation (2011)CEO Compensation continued to rise in 2011Overall, pay for the top 100 highest paid CEOs at major companies rose 20 percent to more than $2 billion, from 2010 to 2011

Example: Top US Bank CEOs (2013)Below chart shows the top ten highest paid CEOs in the US banking industry in 2013

Example: Fast Food CEOs (2000 2013)Over the period between 2000-2013 , he average fast food CEO received annual compensation of $12.5 millionStarbucks, YUM!, Chipotle, McDonalds, and Dominos have had the most persistently high levels of CEO

Example: Non Profit Hospitals CEOs (2013)Apart from Profitable Organizations like Banks, Fast Food industry etc., Certain Non Profit hospitals and their CEOs receive high incomes, as noted belowThere is no indication that this comes from being especially efficient , but yet the CEOs are compensated well

RECOMMENDATIONSCompensation should encourage the company and individual performance.Organizations must reveal data concerning the sum and kind of pay paid to the CEO. Organizations must reveal the criteria utilized for CEO compensation choices and the relationship between the organization official pay compensation and corporate execution.

RECOMMENDATIONSPay bundles today must be sufficiently adaptable to address the issues of an evolving working environment. Benefits should vary for international operations in order to reflect local and regional cultures.Compensation should be in view of the Fair Labor Standards Act, which incorporates procurements for the lowest pay permitted by law, extra hours, and child labor.Must be aware of the state laws representing the lowest pay permitted by law.Should know that employees have become more practical regarding the compensation.RECOMMENDATIONSAppropriate contractual terms and conditions of employment should be discussed.Appropriate compensation philosophy and policies to ensure that the CEO is paid competitively and appropriately.Ensuring awareness of the competitive marketplace and recommended standard pay structures to ensure the CEO is paid fairly for the complexity of the role and the performance delivered.Approving performance objectives and assessment criteria for the CEO.Establishing a performance review process and ensuring that, on an annual basis, performance is assessed (including a 360 review) to be considered when determining pay.Approving any base salary increases and pay-for-performance pay tied to performance as outlined in performance expectations.

RECOMMENDATIONSCEO compensation must be based on the company's progress.Objective measures must be in place to both access the company's progress and provide relevant feedback on compensation.Most important thing to consider is its compensation system aligns with its HR strategy Companies should be aware of and should be committed to implementing these recommendations and specifically be aware of discriminatory practices

ConclusionLeader - Advises the Board, Advocates / promotes organization and stakeholder change related to organization missionVisionary / Information Bearer - Ensures staff and Board have sufficient and up-to-date information, Looks to the future for change opportunities, Interfaces between Board and employees, Interfaces between organization and communityDecision Maker - Formulates policies and planning recommendations to the Board, Decides or guides courses of action in operations by staff ManagerOversees operations of organization - Implements plans, Manages human resources of organization, Manages financial and physical resources, Board DeveloperAssists in the selection and evaluation of board members - Makes recommendations, supports Board during orientation and self-evaluation, Supports Board's evaluation of Chief ExecutiveHuman Resource Management Effectively manages the human resources of the organization according to authorized personnel policies and procedures that fully conform to current laws and regulations

ReferencesChief Executive Officer (CEO) Definition | Investopedia. (2003, November 18). Retrieved April 14, 2015, from http://www.investopedia.com/terms/c/ceo.aspRouse, M. (2008). What is CEO (Chief Executive Officer)? - Definition from WhatIs.com. Retrieved April 14, 2015, from http://searchcio.techtarget.com/definition/CEOhttp://www.steverrobbins.com/articles/ceojob/http://www.epi.org/publication/ceo-pay-continues-to-rise/

ReferencesKappel, M. (2012, July 8). What is Compensation? Retrieved April 14, 2015, from https://www.patriotsoftware.com/payroll/training/blog/what-is-compensation/Davis, A., & Mishel, L. (2014, June 12). CEO Pay Continues to Rise as Typical Workers Are Paid Less. Retrieved April 14, 2015, from http://www.epi.org/publication/ceo-pay-continues-to-rise/Krantz, M. (2015, April 6). Maximum Wage! How much CEOs earn an hour. Retrieved April 14, 2015, from http://www.usatoday.com/story/money/2015/04/06/how-much-ceos-earn-hourly/25353423/Forbes - CEO Compensation, 2012. Retrieved April 14, 2015, from http://www.forbes.com/lists/2012/12/ceo-compensation-12-historical-pay-chart.htmlHeathfield, S. (2015). Executive Compensation Definition. Retrieved April 14, 2015, from http://humanresources.about.com/od/glossarye/g/executivecomp.htmReferences - Exampleshttp://iveybusinessjournal.com/publication/the-wall-street-example-bringing-excessive-executive-compensation-into-line/http://www.boston.com/business/articles/2012/04/08/ceo_compensation_continued_to_rise_in_2011/http://leasingnews.org/archives/Jun2014/6_11.htmhttp://www.demos.org/publication/fast-food-failure-how-ceo-worker-pay-disparity-undermines-industry-and-overall-economyhttp://aneconomicsense.com/2013/12/26/vested-interests-in-health-care-spectacular-profits-and-earnings-for-at-least-some-insurers-and-providers/