Kroger's Executive Compensation Issues

Records as from 2006 show that Kroger’s has always the second largest seller and producer of all groceries by the determined revenue estimated at $70 billion. Its success draws back to 1883 where it eventually became one of major chain stores in the US.

The board of directors is responsible for determining the compensation that is deemed necessary for every executive. They have to base on the tasks and workloads that exist in line with the desired compensation.  The company owners have the final say in the whole issue and they have to consult the board of directors. These compensation packages include the base salary, the existing short-term incentives, perks, long-term incentives, and also benefits.  

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Problems with the executive compensation structure

The first problem is where the Short-term incentives are always geared towards benefiting the corporation on a short term basis. The expenses usually lie on the executives. The corporation should actually base its targets on the long term issue and even if they base on the short term, they should not represent the larger portion of their goals and targets. The CEO’s package also discourages other employees. The CEO’s package has been on the rise by a massive 10% on an annual basis and this is not the case with other employees. The latter’s dues only come in at a mere 1%, which represents the disparity that arises in the whole scenario. This is a major problem and it will affect the whole corporation’s performance. It may bring back the goals and targets in the bid to achieve the desires of the corporation.

Alternatives

The short term incentives should not be given priority as they will eventually affect the whole performance of the organization. There is a need to look at the long term goals that may have a greater influence on the corporation. The market is competitive and since there are many players in the whole market and there is need for clear analysis and consideration of the other goals.

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In line with the CEO’s package and compensation, it is wise that the corporation gives a higher package to the other employees. They should consider the tasks at hand before giving out the package. There are some employees who put in their best in their work therefore they should be considered at large.

Consequences

Consideration of long term goals will have both positive and negative impacts. It will have a sole purpose of considering the targets that are geared towards the sustenance of the corporation. On the other hand, this will mean that the corporation will give less consideration to the immediate problems that may hamper the corporation. This will affect the overall performance of the company.

Considering the package of other employees will boost the morale of the whole corporation. Employees are the main determinants of the success of the company. This means that the employees will have to offer their best if they are given their level best in terms of compensation. On the other hand, this may affect the management as some of their compensation will have to be cut off in a bid to satisfy the other employees.

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The alternatives will make the organization habitable and easy relationships between the management and the employees. This will mean that an open door policy will be embraced and hence employees will be better placed to air their issues without any fear.

All in all, Kroger had a chance and enough time to deal with the issues concerned with compensation. If all the recommendations are considered, they can lead to a better corporation that will be all inclusive and considerate.

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