Publicly Traded Company

 

Publicly Traded Company

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Publicly Traded Company

A publicly traded company is a company which issues shares to be traded on an open market. This is either through a stock exchange or over the counter market. This means that the company’s main class of shares is stated on an existing and recognized stock exchange and that these shares can be readily bought by the public. This ensures that the ownership of the company is not restricted to a group of investors (OECD, 2002).

Publicly traded companies, also known as public companies, have a great access to capital as they can issue more shares to raise more money. However, they have a number of shortcomings such as they have to list and publish annually their reports on their earnings and they are likely to be subjected to dual taxation as corporate tax is charged on the company’s earnings and the shareholders are also taxed on their incomes.

Under Armour Company Description

Under Armour is an American company that deals with sportswear and accessories. Its international headquarters is in Baltimore, Maryland while its European head office is positioned in Amsterdam’s Olympic Stadium. Other offices are found in Hong Kong, Colorado, Denver, Indonesia, Toronto, Canada, Jakarta, and Guangzhou.

The Under Armour brand mission statement is to make all athletes better through passion, design and the relentless pursuits of innovation. Their vision is to empower athletes everywhere. The brand’s value is that every product they build must be better than what is currently available on the market and it must be field tested. They respect the universal guarantee of performance.

The corporation was started in 1996 by Kevin, a fullback and a team captain of the University of Maryland. He was 23 years old and was inspired to design a T-shirt made of moisture-wicking synthetic fabric as he was irritated by having to change the sweat-soaked T-shirts worn before his jersey. His major competitors including, Nike, Reebok, and Adidas soon followed Plank’s new ways.

Under Armour got its first big breakthrough in 1999 when it was bought by Warner Brothers to outfit films. This generated almost $ 750,000 from the sales. Plank had not put himself on the payroll until after nine years after starting the company.

The company now sponsors the NFL Combine with the kits worn by athletes in the competition. It’s is also a major sponsor of the Duck Dynasty reality TV show.

Under Armour offer several product lines which include: TurfGear, StreetGear,.AllseasonGear, ColdGear (which uses ceramic powder to disseminate heat and circulate the heat throughout the body), the Under Armour Scent Control (designed in a way that the scent of the wearer cannot be detected), and Speedform shoe product that lacks insole and is less stitching. Under Armour started to offer footwear in 2006 and this constitutes the fastest growing line. The company is designing a gear named Coldblack that will keep athletes cool under the sun. Under Armour has brought up new styles for the football kits. The company also produces a variety of accessories which range from: sunglasses, equipment, gloves, socks, headwear, Armour39, bags and backpacks.

Under Armour participates in Corporate Social Responsibility (CSR) where it gives back to the community through UA Freedom, UA Youth Movement, UA Green, and UA Power in Pink.

Under Armour has partnered with Habitat for Humanity, The V Foundation, The Living Classrooms Foundation, The Boomer Esiason Foundation, The Ronald McDonald House, and The Wounded Warrior Project.

Under Armour Company Compensation Strategy

A compensation strategy is the purposeful profitable use of a pay system which is vital in the assimilation of a mechanism where the efforts of the several subunits and persons are geared towards attaining an organization’s strategic goals, conditional upon internal and external constraints.

The basis of the strategic perspective on this compensation is under two fundamental assumptions. First, because the effectiveness of the pay system relies on how it is sensitive to internal and external factors on the firm and its structural setup, the pay system cannot be examined in isolation. Second, an organization has the ability to make intellectual decision on how to choose from the various pay policies and procedures in which each of them may have implications (Gomez-Mejia, 2010).

The Board of Directors (BOD) is the main body that makes decisions of the company apart from matters reserved to the shareholders. The BOD elects the CEO and other members of the board who are responsible for enforcing standards of accountability in the interests of the shareholders.

Under Amour’s compensation committee is made up from the Board of Directors whose primary purpose is to approve, implement, administer and evaluate the reimbursement plans, policies, and programs for the firm’s directors, the CEO and other officers of the corporation.

The committee evaluates its performance annually and comes up with the criteria for the evaluation. They review not less than annually the Company’s objectives related to the CEO’s and executive officers’ compensation and the fair play between short-term compensation and long-term rewards or incentives. The compensation level, that includes base and incentive compensation and other benefits to the Chief Executive Officer and officers is established after their (CEO and the other executive officers) performance appraisal in accordance to the Company’s goals and objectives. Such factors as, company’s performance and return on investment that are deemed appropriate are important in determining the incentive compensation. The value of the same incentive rewards the individuals holding such positions at another comparable company and the prizes given to the administrators in the prior years. The Chairperson of the committee communicates to the CEO about the appraisal and the corresponding level of compensation agreed upon.

The committee reviews the salary merit increases in the Company, annual incentive plan, and guidelines for the performance evaluation. They also look at the position evaluations and promotional salary increases, and review then pass employment contracts and arrangements to be made by the organization. The committee recommends the establishment of, amendments to and if necessary termination of, rewards compensation plans, capital – based plans, deferred compensation and other extra agreements to the officers. These plans are administered by the committee and the desired interpretations, and determinations are made.

The committee reviews each year any share ownership applicable to the officers of the Company and to the public.

The committee may get the advice of an independent legal counsel, compensation consultant, or any other advisor. They determine the compensations and of the duties performed by the advisor. This must be a reasonable compensation plan taking into consideration all factors essential to the individual’s independence from the management.

In executing its duties, the committee needs to have full access to the required information of the company and may also have any employee, including the human resource manager, to meet with any member of the committee or consultant of the Company.

Under Armour Best Practices

The organization has made its name to many professional and amateur athletes. This has been facilitated by its products special ability to maintain the wearer dry and comfortable.

In the event where the product doesn’t meet the customers’ expectations, they have a return policy that covers the customers. If the customers are not 100% satisfied by their gear, they are guaranteed to return it anytime for any motive, or a full repayment of their money.

The Company’s logo is now found everywhere in gyms’ locker rooms, and on sports arenas all over the country. This is a good marketing strategy as it creates awareness of their products to large numbers of distinct individuals.

The company has been able to attract talents and has created a collaborative and hardworking workforce. This has made it possible to attain big investment returns to shareholders. For example, over the last five years the company’s shares have risen to $45 from roughly $15.

Under Armour involves in CSR. It supports breast cancer charities, local Baltimore projects, and wounded soldiers and recycles plastics as raw material for some of their apparel. Kevin Plank, the Company’s CEO, donates 10% of his share earnings to the Cupid Foundation. This creates an optimistic figure to the community about the firm and they feel more attached to it for the reasons its gives back to the society, and its good quality products.

However, the company has also some faults. For instance, Under Armour has gotten into concerned inventory management issue which has alarmed investors and the industry analysts. However, in the meantime, this appears to have been righted.

Compensation Related Challenges, Laws, Labor Unions, and Market Factors

When it comes to HR departments, compensation plans are a major issue. This issue is even of greater deal in small businesses because of their limited budgets which makes their compensation packages even limited as well. Under Armour, also being a big company with great access to finances is faced by the compensation structures issue.

It is important for the management to hire workers and keep their positions once they are employed. The company cannot afford to lose key talents to competition due to poor compensation. This poses a big challenge as they have to keep on increasing rewards for the employees. This makes the company to incur more expenses. When recruiting, the company needs to raise the salaries and benefits in order to attract employees of greater value to the company.

Compensation is critical to employee motivation. Executives and other employees who feel they are rewarded adequately for their contribution perform their jobs better. It’s however difficult to find the balance. This is due to the fact that emotions influence both the employer’s and the employee’s perceptions of their respective contributions.

The law requires that the reimbursement of the employee be maintained and benefits paid comparable to the level of work. The employees’ unions have constantly disagreed with the way in which the comparability should be applied and have often involved a third party to settle their disputes. Disagreements and disputes between these playing groups have major operational, financial, and human capital implications. The service is thereby challenged to bring up ways to strengthen the relationship and to carry out the changes for the implementation of the transformation plan.

Previously, the labor market has been based on the principle of demand snd supply. The academic labor market is now the major factor in the overlapping job markets. The company needs to consider its mission, which leads to various priorities in recruitment. This constitutes the different labor markets. Experience in a certain field equips an employee with more skills and knowledge. The more exeperience the expertise, the more their pack of remuneration.

Compensation strategy is a major factor that contributes to the success or failure of a business. The good compensation plans in Under Armour has contributed to its success in business as the employees feel motivated to produce their best. This results to a positive impact on the firm and its stakeholders.

Effectiveness of Traditional Bases for Pay

The strategic pay choices can be categorized into three categories based on the themes underlying the specific choices: administering the compensation system, identifying criteria used to distribute rewards, and assembling the compensation package (Gomez-Mejia, 2010).

Traditional compensation methods use the job-based pay approach where by the job, but not the person’s traits, is used as the measure to ascertain value to the organization. The wages generally change only when the employee’s job is changed (Gomez-Mejia, 2010).

Under Armour employs the skill-based compensation plan which pays attention to individual employee as the value of the firm, and specifically the skills the employee brings to the firm. This forms the basis of their rate of pay.

Traditional basis for pay in Under Armour would therefore not be effective as it may demotivate the employee feeling that they are not being compensated for who they are and the value they bring to the Company. The skill-based is a more fair way to compensate workers though it’s not 100% satisfactory. There is a wide range of dissatisfaction with the performance appraisal which is contributed by the reality that emotions influence both the employer’s and the employee’s perceptions of their respective contributions.

References

Gomez-Mejia, L. R. (2010). Compensation and organizational perfomance.

OECD. (2002). Agreement on exchange of information in tax matters.

States, U. (n.d.). Major management challenges & program risks U.S. postal service.