Compensation and Benefits
Golden parachute
, On the other hand, platinum parachute are lucrative awards, such as the continuation of company benefits that compensate departing executives. Golden and platinum parachute promote the recruitment and retention of talented executives (John, 2016). Second, they limit executives’ risks in the event of unforeseen risks. They also encourage executives to take make risky decisions. However, there is a difference between the two practices. The Golden parachute is tied to corporate restructuring, while platinum is not.
Effective Compensation Package
For compensation to be effective, the compensation package should be designed to facilitate alignment between the executive’s goals and the specific goals of the corporation. Basically, in large companies, the board of directors is in charge of how and what to pay their executives. The Board of directors carries out a variety of roles; They establish the company’s vision, mission, and values, set strategy and structure the company, and delegate authority to management (Prokesch, 2016). SEC makes the boards less independent since federal laws resolve a market failure and improve governance in the corporate world.
Benefits
Reducing burnout amongst employees. When employees know that they can take some time to recharge without feeling like they are doing something wrong, their productivity levels rise, and are more likely to stick around for a lot longer.
Promoting teamwork. When valuable employees need to leave the office and take care of personal business, the other team members can help pick up the slack. This allows workers to bond.
Promoting loyalty of employees. The greatest benefit of implementing a more flexible working environment is reducing the costs related to employee turnovers.
References
John D.(2016) “Golden Parachutes, Shark Repellents, and Hostile Takeovers.” American Economic Review” 76, 155–1
Tran & Walkling (2016), On the importance of golden parachutes”, “Quantitative analysis, “2016, Vol. 48. No. 6, 1717-1753.
Prokesch S.E (2016), Too much gold in the parachute?”, “Journal of accountancy,” October 2016, pp3-40