Executive Compensation Plan
Executive Compensation 1 Executive Compensation Policy Report Desiree N. Staub November 4, 2003 FIN 545 Advance Problems In Finance University of Phoenix Executive Compensation 2 General Mills, Inc. ... Executive compensation policies need to be structured to avoid issues such as incentives, risk sharing, perks, and egos. The primary conflicts between stockholders and management are related to executive salaries, perks, and performance. If the compensation is “too high” it adversely affects stockholders. ... The executive compensation policy for General Mills and Kellogg’s is structured carefully to make sure they achieve their business objectives and they use incentives to align management and stockholder’s interests, to avoid agency conflicts. To deal with conflicts, both companies have designed an executive compensation plan so that Executive Compensation 3 managers do well if and when stockholders do well. This means that compensation is based in large part on operating performance and stock prices. General Mills and Kellogg’s executive compensation policy and principles are very similar. Both company policies include short and long-term incentive compensation for directors, salary employees and its executives based on performance. However, there are some differences that govern Kellogg’s compensation policy. General Mills executive compensation program consists of base salary, annual incentive and long-term incentive compensation. ... However, its Salary Replacement Stock Option Plan gives executives the chance to receive stock options in lieu of merit-related base salary increases.