This document discusses incentives for corporate officers and business unit managers. It describes common executive positions like the CEO, COO, and CFO. It then discusses types of incentives for business unit managers, including financial rewards like bonuses and salaries as well as psychological rewards like promotions. The document outlines two main philosophies for incentive compensation - a fixed pay system versus a performance-based system. It provides details on how bonuses can be determined based on factors like business unit profits, company profits, performance criteria, and adjustments for uncontrollable factors. The bonus determination can be formula-based, subjective, or a combination of both. The bonus is paid out in various forms including cash, stock, and stock options.
3. CORPORATE OFFICERS
Chief Executive Officer (CEO) or President. The CEO has ultimate
responsibility for the corporation's activities, and signs off on
contracts and other legally-binding action on behalf of the
corporation. The CEO reports to the corporation's board of directors.
Chief Operating Officer (COO). Charged with managing the
corporation's day-to-day affairs, the COO usually reports directly to
the CEO.
Chief Financial Officer (CFO) or Treasurer. The CFO is responsible
(directly or indirectly) for almost all of the corporation's financial
matters.
Secretary. The corporation's Secretary is in charge of maintaining and
keeping corporation's records, documents, and "minutes" from
shareholder meetings.
4. CEO COMPENSATION
RANK NAME POSITION COMPANY SALARY BONUS TOTAL
1Federico R. Lopez Chairman & CEO First Gen Corporation 1,792,4001,194,9332,987,333
2
Jaime Augusto Zobel de
Ayala
Chairman & CEO Ayala Corporation 1,658,333 759,7222,418,056
3Eduardo M. Cojuangco, Jr. CEO San Miguel Corporation 1,583,333 745,8332,329,167
4Aurelio R. Montinola III President & CEO Bank of the Philippine Islands 1,504,432 310,5811,815,013
5Nestor V. Tan President Banco de Oro 1,235,500 618,0001,853,500
6Antonino T. Aquino President & CEO Ayala Land Inc. 1,115,833 47,6191,163,452
7Arthur Ty President Metropolitan Bank and Trust Company 984,500 404,8331,389,333
8Tony Tan Caktiong President & CEO Jollibee Foods Corporation 964,255 551,9581,516,213
9James L. Go Chairman & CEO JG Summit Holdings 958,115 15,167 973,282
10Manuel V. Pangilinan President & CEO Manila Electric Company 950,000 433,3331,383,333
6. BUSINESS UNIT MANAGERS
A Business Unit Manager’s primary
responsibility is to ensure that a
business unit – a particular segment
of a company is meeting goals that
contribute to the overall success of a
company
9. TYPES OF INCENTIVES
2. Psychological and Social Rewards
•Promotional possibilities
•Increased responsibilities
•Increased autonomy
•Better geographical location
•Recognition
10. TWO PHILOSOPHIES OF INCENTIVE
COMPENSATION
Recruit good
people
Pay them
well
Expect good
performance
FIXED PAY SYSTEM
11. TWO PHILOSOPHIES OF INCENTIVE
COMPENSATION
Recruit good
people
Expect good
performance
Pay them well if
performance is
actually good
PERFORMANCE –BASED SYSTEM
13. BONUS BASED ON SIZE OF BONUS
RELATIVE TO SALARY
1. Upper Cut-offs – level of performance
at which a maximum bonus
is reached.
2. Lower Cut-offs – level of performance
which no bonus rewards
will be made
15. PERFORMANCE CRITERIA
1. Financial Criteria
a) Contribution Margin
b) Direct business unit profit
c) Controllable business unit profit
d) Income before taxes
e) Net income
f) Return on Investment
g) Economic Value Added
18. PERFORMANCE CRITERIA
3. Nonfinancial Criteria
a) Sales Growth
b)Market Share
c) Customer Satisfaction
d)Quality
e) New product development
f) Personnel development
g)Public responsibility
19. PERFORMANCE CRITERIA
4. Relative Weights Assigned to Financial and
Nonfinancial criteria
5. Benchmarks for Comparison
•Profit budget
•Past performance
•Competitor’s performance
