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Running Head: EXECUTIVE COMPENSATION
Executive compensation is a term used to define a wide range of compensations given to
executives in an organization in exchange for the services. The packages are designed by the
board of directors as they have to make sure that their executives are comfortable working in the
organization due to the impact they have to the organization. Some of the duties done by these
executives may include but not limited to; making of decisions, coming up with company
strategies and creating value in the organization. Different companies have various compensation
programs owing to the differences in revenue, the complexity of the position and the abilities of
the executives. Six essential tools are involved in compensation and include; employee benefits,
short term and long term incentive plans, salaries and insurance.
Netflix’s Compensation Program
Netflix is an online movie streaming platform. It is one of the few companies that have
experienced a lot of profits in the past year due to proper management and a lot of investments in
its business. The company uses a performance-based compensation program. To begin with, the
executives have a set salary that they are bound to receive whether the company performs well or
not. The company also offers insurance for its employees in the package to make the work more
enticing and attractive to some of the best executives in the entertainment industry (Ritcey &
Zhao, 2017). However, the company has additional bonuses which are given to executives whose
areas have performed well or when the company experiences a lot of revenue coming in.
The method was adopted to keep Netflix ahead of its competitors such as Amazon and
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