PDQ Manufacturing: CEO Case Study



PDQ Manufacturing: CEO Case Study

Background of the Case

The paper provides the analysis of the case study of PDQ manufacturing. The issue arise when the board of directors and committee sent a memorandum to Senior Vice President Human resource. The issue is related to the compensative (Salary) of CEO of PDQ manufacturing. The current recession bring downfall to the industries and companies, and several of employees were downsized from the companies.

The board of directors revaluates the compensation provided to the CEO of the company. They found that the CEO is having much more compensation from the company as compare to the market.

The CEO

A CEO holds the highest rank in the hierarchy of social organization, whether profit or non profit. Its powers vary with the structure, size and nationality of the organization but the spirit of the function varies little: the CEO is the most senior of all operational managers. The CEO of PDQ manufacturing was appointed in the year 2003. The CEO Raymond James was 55 at that time. His initial salary was $400,000. He was appointed on the basis of contract that guaranteed five years appointment with negotiation of the compensation increased for the first three years. The company provided higher amount of salary to the CEO and provided growth to the CEO. The following table is providing the details of how the CEO gets growth in the organization. This table is significant to analyze the case.

Year

CEO Annual Base Salary

CEO % raise

PDQ % growth rate

2003

$400,000

n/a

n/a

2004

$412,000

3% (contractual)

8%

2005

$432,600

5% (contractual)

10%

2006

$464,882

7% (contractual)

0%

2007

$506,722

9% (approved by compensation committee)

-3%

2008

$562,461

11% (approved by compensation committee)

-7%

2009

$635,580

13% (approved by compensation committee)

-5%

The company has always provided growth to the CEO and his compensation never stopped.

Critical Evaluation of the Growth

If analyze the growth of the CEO we can conclude that CEO has never faced any difficulties in his compensation growth the company has always provided him the best opportunities, even in the years of recession the CEO gain his growth. There are some surprising facts in the case that the company has faced several downfalls and the growth decline and seemed negative, but still the CEO got his growth according to his work. In the past two years, when the company faced major negative growth even then the CEO got highest growth of all the time.

Issues raised by Executive Directors

The directors go for researches and go for the trend in the same industry. They found that the CEO Raymond is getting highest growth and he is getting highest compensation in the market. After the recession the companies cut down the salaries and compensations of employees but still they are working. The case also highlighted some facts that he was the most salaried CEO identified in the industry. The company is facing several economic problems and it becomes difficult to afford such high paid CEO. They raised the fact the from the year 2003 to 2009 the company get the overall growth of 3% and on the other hand the CEO Raymond receives the growth of ...