Chapter 10 Company Evaluation Exercise

The following is a case study of two companies, Company A and Company B, and their benefits. Read the comparisons and decide which company is the better choice for you. Using the exercise sheet found at the end of the case, compare the compensation benefits and decide what matters the most in your choice of employment.

Stock Options
Company A: If you are a full-time employee, you are eligible to participate in the stock option plan. You may authorize from 3 percent to 12 percent of your pay to be placed in escrow for stock purchases. You may exercise your option to purchase stock at 85 percent of market price on a specified date, generally at one-year intervals. Company B: You are eligible to participate in the stock purchase plan following one month of employment. Through payroll deductions, you may set aside up to 4 percent of your regular pay. When you have a cash balance in your account equal to at least 80 percent of the cost of one share of company common stock at the current market price, the company purchases the stock and pays the remaining 20 percent. Your personal stock certificate is mailed directly to you or may be held by the company until you claim it.

Credit Union
Company A: A credit union has been formed for employees to provide easy saving and borrowing facilities for its members. You may become a member of the credit union at any time during your employment by purchasing a $5 share. Company B: You are invited to join the federal credit union that is designed to encourage systematic savings and to provide a means of obtaining low-interest loans. Payments to savings and/or loans may be made through payroll deductions.

Pay Periods
Company A: As a salaried employee, you will be paid on the 15th and the last day of each month. If an observed holiday falls on a payday or these dates fall on a weekend, the check will be delivered on the last working day preceding the holiday or weekend. Company B: Employees are paid each week on Thursdays.

Vacations
Company A: Vacation is based on your length of service, with time off ranging from two weeks after one year to five weeks after twenty-five years. A vacation year is from June 1 through May 31. Company B: As a full-time employee with less than five years of continuous service, you will earn one week of vacation for each six months of employment. After your fifth year, you will receive a bonus of one week vacation credit and start earning three weeks¶ vacation credit each year. After 20 years, you will receive another bonus of one week vacation, and from that time on you will earn four weeks each year.

each providing reimbursement of 100 percent of tuition and 50 percent of the cost of books and fees. Company B: The company offers four different educational programs tailored to meet varying requirements. Company B: On the first calendar month following six months of employment.000 lifetime maximum for each covered dependent. equivalent time off will be designated and announced by the company. Good Friday. After Hours Continuing Education. will provide an income base. You may select the Safeguard Health Plan. Thanksgiving Day. depending on your time as a participant and the payment option you select. . Company B: Ten paid holidays are observed by this company each year. there is a plant closing beginning before Christmas and continuing until the first working day after New Year¶s Day. Memorial Day. Labor Day. Independence Day. which pays a percentage of the cost of services rendered by your own personal physician. The amount of retirement income paid under the plan is based upon salary and length of service. your yearly income from the plan can be as much as 50 percent of your total deposits. Thanksgiving Day. which performs services at their various local medical centers and applies a surcharge for their services. They are New Year¶s Day. Christmas Eve. In addition. You may go to the physician of your choice. together with Social Security. and Christmas Day. day after Thanksgiving. Medical Insurance Company A: You and eligible dependents are covered for medical care services provided by the plan to a maximum of $500. after 30 days of employment you are eligible to join the Company Retirement Plan. An employee may elect to work for a degree in a field that is of benefit to the firm or to take job-related courses.Holidays Company A: The company observes 11 holidays each year to be taken without loss of pay: New Year¶s Day. and Christmas Day. Memorial Day. or you may choose Security Medical Services. To assist in enhancing employees¶ educational background. Friday after Thanksgiving Day.000 per person per year. Retirement Plan Company A: The company sponsors a paid Retirement Plan designed to provide basic retirement income that. two floating holidays to be specified on an annual basis. Holidays are scheduled by the company and are adjusted to use the least possible amount of employee vacation time during the year-end closing each year. Independence Day. In the event that a holiday falls on a Saturday or Sunday. with a $50. Washington¶s Birthday. there are five educational improvement programs: Tuition Aid. you and your eligible dependents are covered by the group medical plan. Upon retirement. As a participant you can have up to 4 percent of your earnings deducted from your paycheck and deposited in the plan. Graduate Degree Study. Education Programs Company A: The company encourages employees to continue their education. Labor Day. a floating holiday and two half-day holidays scheduled by management. The plan also includes approximately 50 percent of the current normal charges for mental health professionals. and Educational Leave of Absence. Company B: If you are under age 60. On-Hours Education.

it¶s the law. BENEFIT Stock Options Credit Union Pay Periods Vacations Holidays Education Programs Retirement Plan Medical Insurance Company A 3 3 2 4 3 3 3 2 Company B 2 3 3 3 3 4 3 2 2. The three benefits that appeal to me the most are Medical Insurance. 3. Retirement Plan. and Education Programs. and child care expenses. I look forward to the future and realize that I will need money after I retire. I am always interested in improving my education. 4. and 1: poor ± to evaluate the benefits for each company. I choosed company A because the Vacations are top notch for the industry and its education program is decent. 2: fair. Use the numbers 1 through 4 ± 4: excellent. 3: good. Based on your evaluation above. and personal preferences. Medical Insurance is like a seat belt. List three benefits that appeal to you the most. an education program that paid 100% tuition. rank Company A and B on the basis of your needs. Explain why. . what specific benefits would you suggest? I would specifically sugest a 401k retirement plan. lifestyle. If you could add to the benefits found in your chosen company.Name: Justin Palmer Compensation Case Study Worksheet After reviewing the previous materials on compensation. which company would be your choice? Why? Based on the offerings from Companies A and B. I would choose company A.

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