Kroger Corporation Case

Executive compensation has been at the forefront of discussion for a long period of time. Analyzed by academics, highlighted by the media, questioned by Congress, and scrutinized by the general public, the topic warrants much debate. In the 1990’s, total executive compensation increased substantially as companies began offering stock option programs; CEO’s of S&P 500 saw an average increase of 150%.

This paper looks at the opinions and issues involved within executive compensation. This is important because executive compensation is such an integral part of a company or organization’s functions. Executives are the ones tasked with making the decisions within an organization, and their pay can sometimes be linked to how well or how not well their decisions pan out. To look at these opinions, research and high quality analyses from various data sources were used. Some of these sources included the in-class textbook, “Compensation” by George Milkovich, Jerry Newman, and Barry Gerhart. While other sources used, included peer reviewed journals as preferred by the professor. All of these sources were used to show the relevance between executive compensation and compensation management as an entirety. The results are across the board; there are issues and opinions that clearly contradict each other and individuals take many different stances on the topic of executive compensation. The conclusion is that this will continue to be an ongoing and sensitive topic to discuss within organization structures and plenty more research and data will arise for individuals to gain further and deeper understanding of the complex nature of executive compensation.

However, there have been many cases where the CEO and executive officers receive outrageous compensation even when the companies suffer. Overall, there is a wide disconnect between the incentive of the executives and the financial performance of their company, which needs to be fixed. By passing regulations and rules such as the Dodd-Frank Act, there is hope of shedding light on the connection between the company’s performance and the executives pay. Although it will provide a clear insight, it will not be able to set a strict regulated compensation or define what an executive should earn. Instead regulations will allow for more transparency for the shareholders regarding corporate governance issues such as executive pay. Along with that, it will force companies to take accountability for their actions. If they do poorly, then the executives should be paid less, and vice versa. Overall, there should be a direct alignment between executive pay and the company’s

I agree with the advisory votes provision of the Dodd-Frank Act, because it serves as a valuable means of gauging the pulse of the collective shareholders’ interests. Since executive compensation is an important tool intended to align the interests of both the corporation and the shareholders, a system of assessing the shareholders’ interests is necessary – without it, the shareholders’ interests are in many ways left to speculation. Given the varied geographical locations of the shareholders and the regulations governing their ability to interact with one another, the advisory votes mandate affords the shareholders a collective voice and provides the board of directors with valuable feedback.

Directors have awarded compensation packages that go well beyond what is required to attract and hold on to executives and have rewarded even poorly performing executives. These executive pay excesses come at the expense of shareholders as well as the company and its employees. Furthermore, a poorly designed executive compensation package can reward decisions that are not in the long-term interests of a company. Excessive CEO pay is essentially a corporate governance problem. When CEOs have too much power in the boardroom, they are able to extract what economists' call "economic rents" from shareholders (Economic rent is distinct from economic profit, which is the difference between a firm's revenues and the opportunity cost of its inputs). The board of directors is supposed to protect shareholder interests and minimize these costs. At approximately two-thirds of US companies, the CEO sits as the board's chair. When one single person serves as both chair and CEO, it is impossible to objectively monitor and evaluate his or her own performance.

Informal workplace communication is any kind of interaction that takes place in the workplace outside of office memos, emails, phone calls, letters, presentations, fax or any medium prescribed by management. (Reyes, 2014) Formal communications within an organization are those that take place through well-known channels. (Management, 2013) Formal communications would also include all of the paper-based and electronic communications that are available to members as well as the meetings that take place. (Management, 2013) Informal communications are those that are not based upon any set measures. (Management, 2013) For example, teaching with hands on by showing each member of the team how to play each play as a team. In today’s

Competitive Analysis To conduct a competitive analysis is a necessary part of an organization’s marketing plan to establish the growth of their product or services offered to the public. They have to evaluate their competitors in terms of their products or services, its profitability, growth pattern, marketing objectives, strategies, and structure. Through this analysis, it can help them determine the strengths and weakness of their competitor and may devise a business plan to effectively be on top of the competition, which can be used at their advantage. (Entrepreneur Media Inc., 2014)

Kroger, a grocery store that is slowing evolving into a Walmart or Target was started up by Barney Kroger. Barney used his life savings that consisted of $372 to open the very first Kroger store in downtown Cincinnati. Barney lived by his motto “Be particular. Never sell anything you would not want yourself “. Kroger has an established business ethics and they also have core values set in place. To help support their employees they also have an established labor union along with other strongly supported policies. Kroger was able to achieve its growth by merging with other successful companies.

We are pleased to announce that Bich Nguyen has accepted the position of Merchandising/Drug Manager for District 6. In her new role, Bich will report to Cecilia Sarabia, District 6 Manager.

We believe giving executive compensation with the financial support bestowed from the government during the economic crisis is unethical as they are aimed to support the companies from facing bankruptcy or from financial struggles they are currently facing. The stakeholders involved in this financial crisis were the chief executive officers of the major banks, the investors who invested into the companies, those who bought CDOs and other “garbage”, and ultimately the taxpayers whose money were used to relieve the major banks from going into bankruptcy.

The Kroger organization is a great company that focuses on the customer needs when shopping. It is amazing that Kroger has great staff members as well as manager that love to see the organization improve and expand. The managers and staff members are willing to take the time a improve leadership programs to better assist customers. The organization is willing to let managers make decision to improve the financial obligation of the company. The Kroger industry has great managers that in the past as well as present improve the company financially over the years.

In terms of Dodd-Frank’s effects on corporate governance, the first question is “does say on pay undermine the duties of the board of directors?” The only answer is, “not if the company’s Board of Directors is effective.” This legislation forces accountability for the board of directors to ensure that its compensation packages are based on measureable facts which truly tie into the performance of the company. The Citigroup CEO Compensation pushback by shareholders serves as an example where it was rejected in 2011. Upon further inspection by the shareholders, the CEO’s large compensation package had nothing to do with the performance of the company and would not provide the shareholders any true value.

If we take the time to develop employees financially we could help set the tone and improve the economy/awareness. As far as the role the government has when it comes to executive compensation, I believe the should be enforcers and ensure that employees are treated fairly. Understandably that there will be a difference depending on the levels of responsivity but overall all should have a CAP and be afforded the opportunity. After reading up about the Sarbanes-Oxley act from what I gather the act was signed in 2002 and being that its almost 2017 I would suggest that its revisited just to ensure it is valid for today. In my personally opinion I believe that act should be stricter because as an investor I only know what the company allows me to know and sadly when things are not done correctly some are only looking to take care of self. Malpractice happens more than when know and more than what is being reported. The downside is that once things start to spiral out of control investors are often the last to know and end up taking the

According to Dodd Frank Act, 2010, companies have to disclose this inequality and reasons of high compensation given to their executives. The board members continue to find avenues to continue this high compensation. However, being so concerned about the CEO compensation and not being concerned about their employees could cause employees to quit. The employees don’t look to be making what the CEOs make, but at some point they will feel they are being taken advantage of. This could cause the company to lose dedicated and reliable employees because of their selfish acts. Society will began to have a different out look on certain companies, it might come to a point where society might feel if they buy this they are continuing to make these CEOs salaries. This could result in market drops and lack of sales. Continuing this escalation in CEO compensation could result in a lot of consequences to satisfy these tremendous CEO

A major role of this committee is the reviewing of the Company’s compensation strategy. Ensuring that the compensation strategy aligns with their goal to attract and retain high-quality leadership is crucial to the success of The Home Depot. They must make certain that management is awarded the appropriate incentives and rewarded appropriately for its contributions to the growth and profitability of the Company. The Home Depot’s compensation strategy must also align with all of the Company’s objectives and stockholder interests. ("Leadership development &," 2013)