Executive compensation package for this potential hire

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Reference no: EM132228821

Case Study : EXECUTIVE COMPENSATION AT AB3D

Gore & Associates is a company well known for its GORE-TEX fabric for protective outerwear. The company has been included in Fortune’s “100 Best Companies to Work For” list for 17 consecutive years. Gore has received numerous other recognitions as well, including being ranked in the top five on the 2013 World’s Best Multinational Work-places list by the Great Place to Work Institute, named as a best workplace in France, Germany, Italy, Korea, Sweden, the United Kingdom, and China, and frequently used as an example of a company that is innovative. Rather than job titles, bosses, and organization charts, Gore uses a team approach, with leaders, sponsors, and team members. The main objective of Gore’s compensation plan is to ensure that employees, referred to as associates, are paid for their contributions to the success of the company. Their compensation plan is focused on both internal fairness and external competitiveness. Gore uses two approaches to achieve these goals. The first is straightforward and typically used by companies: comparing pay at Gore with pay for comparable jobs at other companies. In other words, Gore does a lot of bench-marking to be sure their salaries are competitive with the relevant labor markets. That takes care of the external competitiveness part. The internal competitiveness part is what is different at Gore. The process works like this: Associates on the same team rank each other based on contributions to the company for the year. Team members provide a numerical ranking and can provide comments to support their rankings and identify strengths or areas for improvement of the associates they rank. This information is then used for determining raises.

1. What factors are you considering in setting the executive compensation package for this potential hire?

2. What compensation/incentive package would you recommend for the new CEO? Be sure to identify the base pay as well as the forms of short-term and long-term incentives you would recommend. Why would you recommend this package?

3. What implications, if any, would this package have for the workers at AB3D industries?

4. What would you do to address any concerns by the workers with your executive pay plan?

Reference no: EM132228821

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