Created by Syndicate 4, MBA ITB 46A

1. Executive
remuneration at
Reckit Benckinser plc.
By :
Rachmi Rida Utami
Rieke Fitri Yuniar
Yunus Arie Wiratama
Joseph Enrico
Pramadona

2. History of Reckit Benckinser
1999  Formed in December by the merger of
Benckinser N.V. and Reckitt &
Colman plc.
2001  Reckitt Benckinser ranked 11th overall
in consumer package goods.
2002  Total sales 3.5 billion pounds.
 Supported by 23.000 employees.
 Operated in 180 countries and 50
manufacturing facilities across every
continent
2003  Number 1 in the world in household
cleaning products.
 Ranked 3rd in the broader household
goods category
New company reflected the culture of each of
the two combined company (75% from
Benckinser and 25% from Reckit & colman)

3. Company Strategy &
Performance
• To grow by acquisitions and organic growth
through line extentions and new products.
• One important factor: its emphasis on new
products.
• Aggressive in marketing and advertising.
• The strategy consisted of these following core
components:
– Deliver above industry average net revenue
growth
– Leverage out net revenue growth into even
stronger net income growth and strong cash
generation

4. Remuneration Philosophy
• The Global Nature of the remuneration
Plan
– Pay executives in a such way that they
would have complete global mobility
– Valued highly the fresh thingking and
new ideas.
– Developed a plan to motivate and retain
top managers while adhering to a
global remuneration policy.

5. Fundamentals of the remuneration
plan
• The plan consisted of three major
parts:
Salary
• Typically set around the median of competitors
according to compensations surveys.
• Paid in cash
• Most of managers compensation was dependent on the
performance
Short-term incentives
• Paid in cash.
• Based on factors within the managers control
• Three criteria to determined the compensation:
revenue growth, profit growth, net working capital
reduction
Long term incentives
• Based on target related to corporate growth over
three years.

6. Compensation Decision Makers at
Reckitt Benckinser
• The role of Human Resources
– To formulate and maintain the remuneration
policy
– Engaged an external compensation consulting
frim to provide market data and commentary
on market trends
• The role of the board of directors
– As the custodians of the compensation strategy
– To ensure the policy was aligned with the
company culture
– It served the business strategy and executives
– Any changes in compensation policy had to be
approved by the entire board

7. Shareholder Involvement
• Company’s remuneration policy had to be
blessed also by the company shareholders
• Shareholders at Reckitt Benckinser voted
on long term incentive schemes
• Shareholder also had the right to vote on
the amount of dilution allowed under the
plan
• In order to implement its incentives
program and to stay even with the US
competition, Reckittt Benckinser need to
obtain its shareholder approval to raise
this level to above the UK norm

8. Broader Issues on the Table
• There was a general confusion about the
valuation of stock options
• Other issue was the length of contracts for
senior executives
• Reckitt benckinser executives and members
of the board of directors were concerned
about how to sustain their incentive
compensation program while still meeting
the changing expectations of shareholders
• It critical to maintain levels of
compensation attractive