Assignment Task:
Research Project: Proxy Statement Analysis
Topic: Kraft Heinz
Your proxy analysis should be prepared as a formal student paper following APA guidelines (7th ed.). Respond to the questions posed above within an essay format; do not simply list and answer the questions. The analysis must have a title page followed by an abstract and text with major section headings addressing each of the issues identified by the questions above. For example, the first section heading after the Abstract might be titled "Executive Compensation Philosophy." This heading should be followed by a narrative discussion and evaluation of the "executive compensation objectives" or the "compensation philosophy of the company." Be sure to address the questions posed above in your narrative response in each section. The paper should be double-spaced using a 12 pt font and limited to a maximum of 10 pages, excluding the title page and references. So be succinct. One page per major topic area should be adequate to ensure adequate coverage. Back up your statements with arguments, citations, and references.
For the company you select, you will analyze the company's executive compensation program.
Specific factors to be considered are presented below. Refer to materials in the Week 7 module reading "Executive Compensation Disclosure Handbook" for clarification of compensation terms and to SEC Regulation S-K, Item 402 - Executive Compensation, for disclosure requirements. Address the following questions:
Q1. What are the objectives of the company's executive compensation program? Do they appear to support the company's business strategy? If so, how? Demonstrate the linkage.
Q2. On what factors is the CEO assessed? Based on what you have learned about performance appraisal in this course, are the factors/measures used to assess CEO performance appropriate? Are the factors used to assess the performance of the CEO adequately described?
Q3. What was the CEO's total compensation ($) for the most recent year? Does this level of compensation appear to be warranted? Why or why not? Support your response with appropriate arguments, references, or comparisons.
Q4. What is the targeted mix of compensation (expressed as a % of salary, % of annual incentive, and % of long-term incentive) for the CEO? Is this a "good" mix of measures? Why or why not?
Q5. What percentage of the CEO's total compensation is "at risk" (i.e., performance-based)? Does the amount of pay at risk change your view of whether executive pay is too high? Why or why not?
Q6. What percentage of the CEO's total compensation is equity-based (long-term incentive paid in stock)? Why do companies use equity-based compensation? Need Assignment Help?
Q7. Many professionals rely on comparisons of executive compensation with Total Shareholder Return (TSR) as an indicator of "fairness" in executive pay. Does the company you selected use TSR? What is your opinion of TSR as a measure for assessing how well the CEO is performing? What alternatives are proposed by other professionals?
Support your response with appropriate references. Does the company you selected use TSR? If so, how?
Q8. In 2018, the SEC implemented a provision of the Dodd-Frank Act that requires U.S. public companies to disclose the ratio of the CEO's total compensation to that of the "median employee." Why was this provision enacted? Do you believe that this "Pay Ratio Disclosure Rule" will be beneficial in controlling executive compensation? Why or why not? Support your response with appropriate arguments and references. What is the CEO pay ratio for the company you selected?
Q9. The Dodd-Frank Act also requires periodic "Say on Pay" shareholder votes. What precisely does this provision of Dodd-Frank require? What were the results of your company's more recent vote? Do you believe this rule will be beneficial in controlling executive compensation? Why or why not?
Q10. What is your personal take-away from this assignment? In other words, what did you learn about executive compensation that you did not know prior to this assignment? What benefited you the most from the assignment? Be specific!
Notes:
SEC Regulation S-K, Item 402 is summarized in a website sponsored by the School of Law, Cornell University.
A Proxy Statement can frequently be located on the company's corporate website. It can also be located at www.sec.gov Links to an external site.. Enter the EDGAR database, enter the name of the company and locate the latest version of Form DEF 14A. This will be the Proxy Statement. Be sure that you have the most recent filing.