ipl-logo

CEO Compensation Case Study

1235 Words5 Pages

CEO COMPENSATION STRUCTURE FOR CXS CORPORATION

Prepared for
CSX Stock Watch Group
Jacksonville, FL

Prepared by
Amanda N. Morales
Senior Stock Analyst
CSX Corporation

February 22, 2018

CSX Corporation

CSX Stock Watch Group
CSX Corporation
500 Water St.
Jacksonville, FL Dear Group Members:
The attached report, requested by the CSX Stock Watch Group members in a meeting for proposed pay cuts for many employees, describes the types of compensation structures for CEOs and gives a recommendation for the compensation structure for the CEO at CSX. I believe this analysis will be useful financially.
This research was completed to examine CEO compensation to answer the following three questions:
• How does CEO …show more content…

The purpose of this report was requested to determine how CEOs are compensated. We will look at the CEO of CSX specifically and determine whether or not that compensation is excessive. This study is designed to answer the following three questions:

• How does CEO compensation structure work?
• What is the compensation structure for the current CEO at CSX?
• Should the CEO be moved to a different compensation structure?

BACKGROUND: CEO COMPENSATION STRUCTURES AND HOW THEY WORK

Some CEOs have been criticized for their seemingly excessive pay while their employees earn minimal pay. We will be looking at the components that make up a CEO’s compensation plan, and we will find out why their pay can be so high.

A CEO is the chief executive officer for a particular company. They are ultimately in charge of a company’s success or failure while in the position as CEO. Their goal is to increase the value of the company.

One of three methods generally determines a CEOs compensation; those methods are by a board that works within the same company, by an external analyst, or in direct relation to performance. According to Lansing and Knoedgen (2007), CEO compensation that is tied to a board’s decision can be biased to be higher than average, because the board members are usually current or former CEOs and would like to maintain the opportunity for the CEO to be a future business partner if …show more content…

I say this because the CEO of Home Depot performed poorly in one aspect so the means to measure his success were changed to reflect the accomplishments from a different perspective. Alan Murray in the Wall Street Journal said “Take the case of Home Depot CEO Robert Nardelli, quickly becoming a favorite target of critics of excessive pay. A footnote in his company's 2004 proxy statement says his long-term incentive pay will be calculated by looking at "total return to shareholders over the three-year performance period" and comparing that to "an established peer group of retailers." By that measure, he has bombed. Home Depot's stock has fallen since he took over in December 2000; meanwhile, rival Lowe's shares have soared. BUT IN LAST YEAR'S proxy, the footnote changed. Mr. Nardelli now gets his incentive pay if the company "achieves specified levels of average diluted earnings per share" -- a measure by which Home Depot looks far more successful. Shareholders may not be better off, but Mr. Nardelli is.” This statement shows that pay can be changed even if the structure has been

Show More
Related
1214 Words | 5 Pages

The Home Depot has paid a dividend each quarter since the 1990’s, raising dividends on every fourth occasion. They even continued to roll out dividends during the financial crisis in 2008 and 2009. For a company so dependent on the housing market this is extremely impressive, and speaks volumes about financial strength. Management currently promises on returning 50% of earning each year through quarterly dividends. They are also committed to reducing share count.

Read More
696 Words | 3 Pages

Reading Assignment #6 1. In order to keep top performers satisfied and productive, Steve Bates argues, there should be a substantial difference in the variable pay or merit- based salary increases that top performers and poor performers receive. Based on available research the increase needed to catch “anybody’s attention” should be a seven percent or eight percent increase in compensation. It also states that anything below that might be welcomed, but will not lead to substantially greater effort on the part of employees to increase business results.

Read More
794 Words | 4 Pages

Introduction Freedom of speech is a luxury afforded to every American citizen, however oftentimes that particular freedom may come with a cost. Both Roth and Sinderman were professors at institutions of higher education who spoke out in regards to their dissatisfaction with their institutions and in return, their contracts were not renewed for their positions. Their former places of employment did not directly link the actions of their employees to the termination; however, both Roth and Sinderman believed that speaking out led to the cause of their termination. Both of these cases introduced a clearer definition on what it means to be a tenured and non-tenured employee as it relates to the 14th Amendment. The term tenured can vary by the place of employment.

Read More
828 Words | 4 Pages

Chief executive officers (CEOs) are the corporate employees that are responsible for managing an entire organization. Presently there is a controversy over their salary as to whether it is appropriate or not for one person to be paid so much, especially when the company or the economy may not be performing well. Philosopher Jeff Moriarty wrote an article, “Do CEOs Get Paid Too Much?” that tackles this controversy and he provides possible circumstances in which CEO salaries may be justified. Moriarty’s claim is that CEOs are paid too much, if their salaries are not based off one of three popular views (Moriarty 264).

Read More
748 Words | 3 Pages

GE while under Welch achieved one of its primary goals, to make profit. During the time Welch was CEO for GE, shareholders were satisfied by the performance and profit produced from GE. Welch’s

Read More
833 Words | 4 Pages

Total rewards and compensation is the key component for all companies across every industry. Total rewards and compensation can either make a great company or deteriorate a great company. Tangible direct rewards, tangible indirect rewards, and intangible rewards are the three components to total rewards and compensation. (Valentine, 2014, pp. 368) Tangible direct rewards compose of base pay and variable pay.

Read More
475 Words | 2 Pages

Based on a video of Wealth Inequality in America, “ The richest (1 percent) is now (2012) taking up almost a quarter (24%) of the national income home; in 1976 they took home only 9%; meaning their share of income has tripled between 30 years.” *add where quote is from*“CEO’s of major corporations earn nearly 300 times more than an average worker.” How is it possible that a CEO earns multiple times more than a regular

Read More
1536 Words | 7 Pages

Introduction Minimum wage is the lowest hourly rate an employer can pay an employee for hours worked. The topic of raising the minimum wage is a sensitive issue for many people. The livelihood of many relevant stakeholders will be directly effected by policies created in regards to raising minimum wage, both positively and negatively. This paper will examine the history and current state of minimum wage. It will identify the issues connected to raising minimum wage, analyze the arguments for and against, and make recommendations based on the analysis.

Read More
965 Words | 4 Pages

The basic functions like legal and tax issues, benefits, EDI, credit and collection, and financial control systems were administrated from this centralized corporate office. Exhibit_8 shows the company’s organization chart as on October 1998. Board of directors chairman W.P Sovey followed by vice chairman & CEO J.J McDonough and president & COO T.A Ferguson represents the very top corporate leadership. Under them, top financial responsibilities were divided between two corporate executives: Vice President-Finance who managed outside asset and liability, and senior vice president-Corporate Controller who focused on internal operations. They reported directly to company president and president reported to CEO.

Read More
1738 Words | 7 Pages

• Global pay system: All managers worldwide receive the same wage. Equality in the amount of work and pay. • They don’t focus on chasing trends. They keep it simple and affordable for all. II.

Read More
1031 Words | 5 Pages

Walmart’s compensation strategy is mostly using base pay that follows the market rate. Employees get paid by hours they worked. Pay rates are different and depend on the job position and working department relative to the organizational structure. Walmart uses job evaluation systems to provide internal equity and determine the basis for wage rate. They evaluated the worth of each job in terms of its skills, knowledge, responsibility or duties required and converted into an hourly, daily, weekly, or monthly wage rate.

Read More
1214 Words | 5 Pages

Case Study – Bill and Melinda Gates 1. What do you think Bill and Melinda Gate’s personality traits are for each of the Big Five dimensions? Compare the two. The purpose of big five is to categorize the personality traits into different dimensions which can help us to understand better how people behave to others and how react in their life.

Read More
752 Words | 4 Pages

The free perks, full benefits, SpaceX clothing, drinks, food, stocks and everything else that Uncle Elon gives us is truly amazing, astonishing, unbelievable, mesmerizing and no words can truly explain what’s it like to be part of the SpaceX and what we do” (Jackson, 2017). Musk is not a very democratic type of leader so he keeps the things straight and a negative reinforcement is not something odd for him to get his work done. But a free flow of information, and liberty of speech and sharing ideas at Musk’s work place give employees an inner encouragement to do the things right and this autonomy leads to better

Read More
920 Words | 4 Pages

ORGANIZATIONAL STRUCTURE Apple Inc. has followed different organizational structures and the changes that came depending upon the time frame and when situations called for it. Our objective is to find out the advantages and disadvantages of different organization structure that Apple Inc. has implemented till now. Apple Inc. has followed a flat structure of organization. Basically this flat structure has encouraged employees to contribute to the decision making process by directly participating in it.

Read More
984 Words | 4 Pages

1. Introduction: A start-up is generally a young business which just begins to develop. These companies are generally meant for innovation of the existing ideas in order to offer product or service that is not available anywhere in market or which are available in an inferior manner. The main essence of start-ups has to do more with high ambition, innovativeness, scalability and growth.

Read More

More about CEO Compensation Case Study

Related Topics

Open Document