Human Resource Management II

Answer 1
 First of all, before compensation committee in planning such a pay some factors should
be taken into consideration for Mr. Anand Sundaresan, such as type of job, the size of the
organization and industry and other factors.
 The compensation committee of Sudarshan Chemicals can make Mr. Anand Sundaresan
the important owner of the company’s stock because it is the most powerful link between
shareholder’s wealth and executives’ wealth. CEOs in a short duration of period can
make money by selling the assets or by sticking to any other unfavorable means and this
could be potentially very damaging for the organization.
 In my view, Pay-for-Performance systems for the CEO Mr. Anand Sundaresan should be
prioritized because, in the long run it would produce lower compensation if the
performance of the executive is not as expected and overtime Mr. Anand Sundaresan
would be replaced by more able and more highly motivated executive who would on
average perform better and earn higher levels of pay.
 The Salaries, bonuses, and stock options for Mr. Anand Sundaresan can be structured so
as to provide big rewards for superior performance and big penalties for poor
performance because clearly the CEO is in charge and responsible for results.

The compensation elements of the CEO are-

1. Long Term Incentives - Long-term incentives are rewards for CEO performance over a
three- to five-year period. Compensation committees often set up long-term incentives
with target and stretch incentives. Long-term incentives provide the most shareholder
value, which is why companies are increasingly compensating their executives according
to their performance.
2. Perks –It refers to additional compensation for executives that isn’t available to other
salaried employees. Perks may come in the form of hired drivers or the use of private
planes, special parking privileges, communications systems in their homes, and security
for executives at home or at work.
3. Base salary - Base salaries for CEOs differ considerably, depending on the type of
industry, the CEO’s years of experience and other factors.

Answer 2
The HR department of the merged entity can restructure the pay of all the employees using these
methods -
1. Conduct a job analysis. - A job analysis involves identifying the essential tasks and
responsibilities of a job, including knowledge skills and abilities.

2. Conduct a job evaluation. – Job evaluation involves comparing or evaluating roles

based on criteria such as the required education and experience, skills, effort, level of
responsibility or authority and potential revenue impact. In order to avoid introducing
bias, the role should be evaluated based on the job criteria, not a specific employee in
that role.

3. Determine the basis for your pay structure

 Pay grades. Pay grades are salary ranges established for groups of jobs with a
similar value to the organization. For example, multiple sales roles may be
included in the same grade if they require the same education, experience, skills
and responsibility.