Strategic Structuring of Staff Salaries

So last weekend I started the compensation module in my EMBA work. I have two significantly sized assignments due next week for it: one with my team on a compensation strategy for a fictitious company, and the other where I make a presentation on the compensation of a publicly traded company’s CEO.

Our fictitious company is called Fastcat, and “they” make custom software for medical providers. (As a side note, I apparently can’t spell fictitious, and have had to use the spell checker on it three times in this short post, yes including the time in this parenthetical remark) My part of the assignment was to work on the salary structure (both internal and external alignment) for the software engineering department. I had nine job descriptions which I needed to assign competency ratings and then research salaries for them.

I put it off until last night, despite having a long day in the car which would have worked great for this kind of work. No, I don’t know why. So while my friends were out listening to live music here in Austin (I’m on a trip…did I mention that?) I stayed in the hotel to try to gain momentum. Thankfully, once I got started, it went more quickly. Within two hours I was where I had wanted to be in the car, and then I shifted focus to the individual project for a bit before heading to bed.

For my CEO salary research, I chose Hasbro, Inc. Their CEO in 2013 was Brian Goldner. I chose Hasbro because they were suggested in jest because my son is still upset that they discontinued making Heroscape. Hasbro, by the way, is based in Rhode Island. I’ve been in cities bigger than Rhode Island (many, if you’re measuring by population), but there are a few corporations based there. In 2013 Goldner received a base salary of $1.2M, but his total compensation was over $27M. Yes, that’s a lot.

I have a lot of work yet for my presentation on Goldner’s pay and Hasbro’s strategy for it, and I may share some of it here. I am not one of those people who think CEOs are overpaid as a rule. If you can convince someone to pay you $27M next year I think you should get to have it. I don’t think it’ll happen to me, but then I’m not sure I would want to be responsible for a company that employs 5500 people and has over $4B in revenue. It may be that Goldner (and others) are overpaid. But I also think that companies that produce things that people want and charge a price people are willing to pay should be allowed to compensate their employees as they see fit. And CEOs hold a lot of responsibility.

I do know, though, that if I was a stockholder in Hasbro I wouldn’t want to pay Goldner anything above his base pay for a year in which Heroscape went on the chopping block. Not and have to face Toby at the dinner table.

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