PROJECT TITLE

COMPENSATION POLICY OF

INDIA LTD

Submitted To - Dr L Gurunathan

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 COMPENSATION STRATEGY OF IBM

1. Introduction:

The expression "compensation" alludes to the blend of wages, salaries and profits
an employee gets in return for work. Compensation may incorporate compensations
or a yearly salary, in addition to bonus instalments, incentives and profits, for
example, bunch health care coverage, short term insurance and commitments to a
retirement bank account. An aggregate compensation bundle can have a few
segments. A "worker compensation plan" altogether alludes to all the parts
notwithstanding the way in which the compensation is paid and for what reason
representatives get case bonuses, salary increments and incentives.

2. Types of plan:

Employees delegated non-exempt get what employers generally call wages, which
are computed on an hourly premise and require overtime payment for work in
overabundance of 40 hours for every week. Overtime is one and a half times the
hourly rate.

Despite the fact that there are salaried employees who are delegated non-exempt
and, along these lines, qualified for overtime pay, the expression "salary" for the
most part alludes to a yearly salary the employee gets or a system for employee
compensation that does not oblige overtime pay. Case in point, the reference to a
"salaried employee" is by and large used to depict a specialist who does not get
overtime pay.

3. Bonuses and Incentives:

Test employee bonus and incentive arrangements incorporate money incentives

focused around a rate of the employee's terrible salary or an employee's offer
focused around an optional pool of stores assigned for conveyance to employees
whose execution helped business achievement. Several official bonuses and

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incentives are attached to change of how the money adds up or even increments in
the estimation of shares for openly held organizations.

Bunch health scope may incorporate supplemental scope for dental and vision care
also. A few employers pay the aggregate expense for minimum period insurance and
offer scope for long term insurance as a major aspect of an employee's aggregate
compensation.

4. IBM’s compensation management:

Trust and personal responsibility in all relationships-relationships with clients,

partners, communities, fellow IBM employees, and investors-is a core value at IBM.
Investors must have the maximum amount of trust in the integrity of a company's
executive compensation process as clients do in the calibre of its products. A breach
of this trust is unacceptable.

As a part of maintaining this trust, IBM well understand the requirement for its
investors-not only professional fund managers and institutional investor groups, but
additionally an incredible number of individual investors-to discover how and why
compensation decisions are made.

IBM has put tremendous effort and rigor into its executive compensation processes
over many years, continually assessing and updating them. Investors-IBM's owners-
want senior leaders to perform the Company in a way that protects and grows their
investment over the long run while appropriately managing risk. That is no simple
task at any business, and at a company as large and complex as IBM, it is a
particularly exciting leadership challenge. IBM holds an original identity, mid-pointed
on talent, brand, global operating footprint, the size and scope of its business overall,
and the size of all of our individual lines of business, with many big enough to be one
of the Fortune 150 biggest companies if these were stand-alone businesses. IBM is
distinctive from companies of comparable size and scale in that the company
operates its business lines as one integrated business in service of its clients, rather
than a portfolio of component businesses. IBM’s integrated model delivers great
value to the investors and the clients, and demands a senior leadership team of
unusual depth, agility and experience.

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5. Key compensation objectives of IBM:

 Make sure that the interests of IBM's leaders are closely aligned with those of
its investors by varying compensation based on long-term and annual
business results;
 Motivate the company leaders to deliver a high degree of business
performance without encouraging excessive risk taking;
 Differentiate rewards to reflect individual and team performance
 Attract and retain highly qualified senior leaders who can drive a global
enterprise to succeed in today's competitive marketplace;

6. Time frames of IBM Executives to earn compensation (source:

IBM.com):

1. Current Year-Salary and annual incentives that reflect actions and results over
12 months;
2. Longer-term-A long-term incentive plan that reflects results over a minimum of
three years, helping to ensure that current results remain sustainable; and
3. Full Career-Deferrals, retention payments and retirement accumulations help
ensure today's leaders stay with IBM until their working careers end.

7. IBM Chairman and CEO Compensation Mix Chart:

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8. How and Why Compensation Decisions Are Made

At any stage, compensation reproduces an employee's value to the business-market

value of skills, individual involvement and business results. To be sure we suitably
measure the value of Senior Executives; IBM follows an evaluation process, pointed
out below:

1. Making Commitments
2. Finding out Senior Vice Presidents (SVPs) Compensation
3. Finding out Compensation for the Chairman and the CEO-Research and Review
4. Ensuring Competitive Pay-Approach to Benchmarking
5. Compensation Committee Consultant approval

9. Setting Performance Targets for Incentive Compensation

Compensation of our senior leaders is highly linked with Company performance

against four key metrics, consistent with our overall financial model:

 Revenue Growth
 Operating Net Income
 Operating EPS
 Free Cash Flow

These metrics and their weightings arrange with IBM's financial model and are
created to correctly balance both short- and long-term objectives. Goals are set for
both annual and long-term incentive applications at extreme degrees every year to
encourage a top level of organization performance with increased exposure of
longer-term financial objectives. These targets, individually and together, are created
to be tough to attain and are set within the parameters of our long-term financial
model with gain expansion and development objectives arranged with your disclosed
financial roadmap to 2015. Within IBM's constant management process, targets are
examined to make sure they do not include an unacceptable number of risks.

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10. Annual Incentive Program:

The Business models organization objectives at the start of every year that are
reviewed by the Board of Directors. These objectives translate to targets for the
Business and for each organization system for applications of deciding the goal
funding of the Annual Incentive Program. Efficiency against organization objectives
establishes the particular overall funding pool for the season that may differ from 0%
to 200% of overall goal incentives for several executives. By the end of the season,
management assesses the financial performance for the Business based on
performance against financial metrics.

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BIBILOGRAPHY :-

1.) IBM Policies Reckoner

2.) IBM Intranet