Executive Pay and Reward: Practices and Impact Analysis

This essay examines the multifaceted issue of executive pay and reward, focusing on its impact on employee performance and shareholder value within the context of Azadea Group. It explores various aspects of executive compensation, including cash compensation, stock options, incentive plans, and retirement packages. The essay highlights how these elements are structured to align the interests of management with shareholders, ultimately aiming to improve organizational performance. Furthermore, it delves into the good practices of executive pay, emphasizing the importance of aligning compensation with company strategy, considering succession planning, and communicating effectively with shareholders. The essay also touches upon ethical considerations and the role of good governance in ensuring fair and effective compensation practices. References from various academic sources support the analysis, providing a comprehensive overview of the topic.

Running head: EXECUTIVE PAY AND REWARD
Executive Pay and Reward
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Executive Pay comprises of financial compensation along with the other non-financial
rewards which is received by the executive from the firm in exchange of their service to
organization. It can be said to be a mixture of the salary and the bonuses that helps in the
growth of an organization. The payment that is based on the executives has emerged to
become common in the last two decades. Transformation taking place in the developed
economies can help in aligning the interests of the management along with the shareholders
that can help the executives in performing in a better manner in an organization (De Vaan,
Elbers and DiPrete 2019). The structuring of the executive pay helps in rewarding the
company performance and it helps in aligning the executive pay with that of the shareholder
value. The executive rewards helps in rewarding the philosophy along with the aspect of the
strategy development which can play a role in augmenting the performance of an
organization. This essay throws light on the issue of the executive pay along with the reward.
It talks about the effect of the executive pay on the performance of employees of Azadea
Group. The essay discusses about how Azadea Group deals with the issue of the executive
pay and the good practices pertaining to executive pay of the company.
The employees of Azadea Group are provided with the cash compensation that helps
in providing encouragement to the people in the executive level in the organization. The
people in the executive level of the company are provided with the cash compensation that
helps in providing encouragement to the top management of the company. According to
Chizema et al. (2015), the workers of Azadea Group are provided with the option grants that
inspires the management of the organization of maximising the shareholder value. The
executives of the organization are provided with the incentive plans in the long term that
improves the performance of the employees. The people in the management of Azadea Group
are provided with the retirement packages that can help the people in the management of the
company in getting benefits after their retirement from the service. It has been argued by

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Frydman and Papanikolaou (2018), that the executive perks are provided to the people
working in Azadea Group like the private jet along with the travel reimbursements that works
to the convenience of the employees of the company.
The executives of Azadea Group are provided with the club memberships along with
the company vehicles that helps in providing encouragement to employees of organization. It
helps the employees in meeting the business objectives that helps in the successful running of
a company. According to Bank, Cheffins and Wells (2016), the good governance in an
organization plays an important role in improving the work efficiency of the employees of
organization. The people in the executive level of Azadea group can be provided with the
variable pay that can be instrumental in boosting the confidence of the employees. It can help
the executives in reaching the organizational performance goal like the specific profit level
that can help the organization in making the profits. The bonus that is paid to the executives
is on the basis of the performance outcome that plays a crucial role in improving the
performance of the employees (Alves, Couto and Francisco 2016).
The executives are provided with the stock option that helps in providing the
employees with the free company stock. The executives of Azadea Group can buy the
company stock at that of a reduced price that comes to be of use for the betterment of the
organization. The stocks becomes valuable in the event of the company improving itself
financially that can help the executives in earning great amount of the benefits. The
executives can sell the stock at a later point of time that helps the executives in earning
dividends. According to Correa and Lel (2016), the executives receive high level of the fringe
benefits like the health insurance along with the life insurance that can serve the interests of
the organization. The executives also possess the contract in relation to the large severance
packages that can act to the reputation of the employees of organization. The executives
enjoy special kinds of benefits like the car service, dining room along with the special

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parking facility that strengthens the management of the company. The executives are
provided with various kinds of opportunities like the membership in the clubs that increases
the prestige of the people in the hierarchy of the management of the organization (Hearn,
Strange and Piesse 2017).
There are ethical questions that are raised in relation to the issue of the executive
compensation. The high level of the pay of the executives often encourages them to make the
business decisions that can provide them with the benefits instead of the organization. It can
help the organization in meeting the performance goals that is important for receiving the
incentive pay. According to Laux (2015), there are illegal practices in relation to the aspect of
the stock options that raises concerns pertaining to the issue of the executive compensation. It
misleads the people in relation to financial health of company that can prove to be damaging
for the reputation of the company.
The business deals with the issue of the executive pay by providing the opportunity of
the restricted stock which is subject to that of vesting. The executives are provided with
various kinds of benefits like the maternity pay that acts as an advantage or the people
working in the executive level of Azadea Group. They can take the help of the relocation
assistance that can be advantageous for the people working within Azadea Group. They also
get the legal assistance that helps them in the event of the company suffering any kind of
legal complications (Foreman and Howard 2016). The workers of Azadea Group are
provided with the Golden Handcuff that helps the bonus in building into the executive
contract that can serve the interests of the people in the higher management of Azadea Group.
The people in the Remuneration Committee of Azadea Group make use of their judgment
that can help in deciding whether the incentivising of the executives can help in delivering
strategic ambitions that has been set by board. The various kinds of schemes are tailored on

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the basis of the circumstances that can help the organization in making the profits in that of
the long run.
There are various kinds of good practices pertaining to the executive pay that can help
n the growth and the development of an organization. The executive pay should align with
that of the best practice that can help in the future prospect of an organization. According to
Bettis et al. (2018), the compensation decisions should take into account the aspect of the
succession planning that can have a positive effect on the performance of an organization. It
can help in engaging and retaining the future leaders that can be instrumental in developing
an organization. Azadea Group thinks in a strategic manner regarding the issue of the
executive compensation that is a good practice pertaining to the executive pay. The proactive
compensation committees in the retail company integrate the compensation policies in the
strategy of the company that can help in the betterment of an organization. The company
integrates the compensation decisions with the element of the succession planning that can
have a dramatic influence on the firm. The people in the board of the company agrees
regarding the skill set along with the competencies that can help in the area of execution of
the long term vision of the company (De Vaan, Elbers and DiPrete 2019). Azadea Group
adopts the objective framework that helps in the identification of right talent that can help in
the arena of implementation of the strategy of the company. Azadea Group understands the
limitations in relation to benchmarking that can help in understanding the problems
pertaining to executive pay. The benchmarks can prove to be useful in assessment of the
competitiveness of the compensation packages that can pave the path for the success of an
organization. The executives should take a differing perspective from that of the directors that
can pave the path for the organizational excellence. Azadea Group communicates with the
shareholders that helps in resolving the issues in relation to the executive compensation. The
company values the open dialogue that can help the organization in earning the profits.

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Executive pay is inclusive of the financial compensation that are got by the executives
in return of their service for a company. The employees of a company being provided with
the salary along with the bonuses can develop an organization. The executive pay should
align with that of the shareholder value that can increase the value of an organization.
Executives of the company are given the benefit of the club memberships that encourages
employees of the company. The employees in the event of being provided with the right kind
of the compensation plans can serve the cause of an organization. The management of
Azadea Group thinks in a strategic manner that has helped the organization in catering to the
needs of the employees.

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References
Alves, P., Couto, E.B. and Francisco, P.M., 2016. Executive pay and performance in
Portuguese listed companies. Research in International Business and Finance, 37, pp.184-
195.
Bank, S.A., Cheffins, B.R. and Wells, H., 2016. Executive pay: What worked. J. Corp. L., 42,
p.59.
Bettis, J.C., Bizjak, J., Coles, J.L. and Kalpathy, S., 2018. Performance-vesting provisions in
executive compensation. Journal of Accounting and Economics, 66(1), pp.194-221.
Chizema, A., Liu, X., Lu, J. and Gao, L., 2015. Politically connected boards and top
executive pay in Chinese listed firms. Strategic Management Journal, 36(6), pp.890-906.
Correa, R. and Lel, U., 2016. Say on pay laws, executive compensation, pay slice, and firm
valuation around the world. Journal of Financial Economics, 122(3), pp.500-520.
De Vaan, M., Elbers, B. and DiPrete, T.A., 2019. Obscured transparency? Compensation
benchmarking and the biasing of executive pay. Management Science.
Foreman, P. and Howard, J.L., 2016. A Research Agenda for Examining the Role of
Compensation Consultants in the Executive Pay Process. Employee Responsibilities and
Rights Journal, 28(3), pp.191-208.
Frydman, C. and Papanikolaou, D., 2018. In search of ideas: Technological innovation and
executive pay inequality. Journal of Financial Economics, 130(1), pp.1-24.
Hearn, B., Strange, R. and Piesse, J., 2017. Social elites on the board and executive pay in
developing countries: Evidence from Africa. Journal of World Business, 52(2), pp.230-243.

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Laux, V., 2015. Executive Pay, Innovation, and Risk‐Taking. Journal of Economics &
Management Strategy, 24(2), pp.275-305.