Chapter 13 Variable Pay

1
Chapter 13 Variable Pay Executive Compensation

• Variable Pay linked to individual, team,
  organizational performance incentives
• Assumptions
• Some jobs contribute more to success than others
• Some people perform better than others
• Employees who perform better should receive more
  compensation
• A portion of some employees total compensation
  should be contingent on performance

2
Types of Variable Pay

• Individual incentives
• Group/Team
• Organization-Wide
• Figure 13-1, p. 411.

3
Successful Variable Pay Plans

• Figure 13-2, p. 412

4
Conditions for Successful Team Incentives

• Figure 13-6, p. 422.

5
Organizational Incentives

• Profit Sharing objectives? Drawbacks?
• Employee Stock Options
• Employee Stock Ownership Plans (ESOPs)

6
Executive Compensation

• Elements
• Reasonableness of