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Journal of Business Case Studies – First Quarter 2018 Volume 14, Number 1

Copyright by author(s); CC-BY

Green Leaf Grocery – Executive Compensation Case Study
Marcus Z. Cox, Stephen F. Austin State University, USA

Robert Mitchell Crocker, Stephen F. Austin State University, USA

ABSTRACT

The primary purpose of this teaching case is to aid students in understanding how

executive compensation plans are utilized to achieve organizational goals and to then

construct their own executive compensation plan for the CEO of Greenleaf Grocery, a

fictional retail business based on an actual company.

Students have the opportunity to create a comprehensive executive compensation plan

using salary, bonuses, stock options, benefits, and other compensation tools. Additionally,

the case provides the opportunity to discuss the use of both short-term and long-term

incentive compensation. The company in this case is poised to undertake an initial public

offering of stock and retaining the current CEO is viewed as critical for this next phase.

The case affords the class the opportunity to explore ethical issues in executive

compensation as well as other aspects of the organization’s overall compensation

structure.

Keywords: Executive Compensation; Teaching Case; Initial Public Offering; Ethical Issues
in Compensation

Suggested Courses: Human Resource Management, Compensation and Benefits,

Strategic Human Resource Management, or Management Principles

INTRODUCTION

Maria Sanchez, the Chair of Green Leaf’s board of directors, hung up the phone. It had

been a long week and she had just received frustrating news. Jack Lawrence, the CEO of
Green Leaf had just called to inform her that he had been approached by the board
chairman of one of Green Leaf’s competitors in the grocery business asking if he would be
interested in joining their company as CEO. Jack knew it was a small world and that this
news might reach Maria or other board members and he wanted her to know that he had
not initiated this contact. Jack was a talented, aggressive executive in the grocery industry
and it was not surprising that he was getting attention from rivals. But Maria also suspected
that there was some political gamesmanship involved here as Jack and the board of
directors at Green Leaf had been working on the parameters of a new compensation plan
for the CEO.

Journal of Business Case Studies – First Quarter 2018 Volume 14, Number 1

Copyright by author(s); CC-BY

As Maria drove home that night she reflected on Jack’s contribution to Green Leaf. He had

been brought in as CEO following the then CEO’s untimely death in 2005. Back then, as an
ambitious, regional vice president for Target, he had sold the board on his vision for Green

Leaf and his desire to grow the chain. Some had believed that he was too young and

lacked the experience necessary, but he had proved them wrong. During his time Note,
This course is Compensation and Benefits

Complete the Case study according to the following requirements

4 page
Case required
Here are the questions/issues from the case study your case analysis should address.  Your submission should NOT be a question/answer approach, but rather an integrated case study detailing your analysis and recommendations. 
1, Develop a compensation proposal for the CEO that would be competitive with offers from rival firms attempting to lure the CEO away. The compensation proposal should be a “total compensation” package in that it addresses all facets of total compensation (e.g. salary, bonuses, benefits, and perks that are consistent with someone of this stature).
2,Ensure that the company has a successful IPO and that there is continuity in top leadership for the next five years.
3,Align the interest of the CEO with the stockholders of the firm.
4, Reward the CEO for reasonable risk-taking and growth of the firm.
5,Last, the board has come under criticism from employees and die-hard customers who see the company culture moving away from its early “family firm” roots and becoming more corporate. The board is worried that there will be a negative reaction to what might be perceived as an “excessive compensation plan” by some. They would like to know if you have any creative solutions that might help alleviate that criticism.

  
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