Human Resources Companies That Pursue Essay

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The act contains a prescription drug entitlement. This is accomplished by providing subsidies for employers to convince them not to eliminate prescription drug benefits for retired workers. Further subsidies were made to prescription drugs for Medicare beneficiaries. Extra money was given to rural hospitals. The act also provided for a trial of partly-privatized Medicare.

Another result of the act was the creation of health savings accounts for workers. These replace company-run health reimbursement arrangements, and the HSAs offer advantages over flexible spending accounts, especially because the former rolls over where the latter does not. This part of the act was designed to replace the Medical Savings Account system. Lastly, there were internal changes such as with respect to the way claims are processed.

This law is a good law. While expensive for the federal government because of its prescription drug provisions, it introduced the HSA system, which represents an improvement over older systems. The implementation of a pre-tax HSA lowers the out-of-pocket health care costs for working people. This also represents a move to consumer driven health care, which is beneficial for workers.

Additionally, the subsidies to promote the retention of prescription plans for retired workers remove significant burdens to companies. Many firms struggle with their obligations to retirees as a result of large numbers of retirees, smaller numbers of workers today, escalating health care costs (especially drugs) and longer lifespans. This act lowers this burden, which enhances the financial health of the company while retaining service levels to retirees.

4) Compensation committees often do not act in the best interests of the shareholders. Part of the problem is that compensation committees have little guidance as to how to ensure compensation is tied to shareholder interests.

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Shareholders do not have strong mechanisms with which to articulate their goals.

Additionally, shareholders do not have direct control over the compensation committees. The Board is often the body that elects such committees. There may not be direct conflict of interest in the choice of committee members, but often the interests of the committee are more closely aligned with the interests of the executive team.

In order to make the function of compensation committees more consistent with shareholder interests, three things need to happen. The first is that shareholders need more direct control over the committees. This can be accomplished directly, by removing the extra layer that the Board represents from the relationship. It could also be done indirectly, by offering shares so that the committee members are also shareholders with a long-term stake in the company.

The other means of improvement is to provide better mechanisms for the shareholders to communicate their needs to compensation committees. Typically this is only done through election of the Board, but this system makes communication difficult. Shareholders must become more organized and the Board must provide easier communication flow between the shareholders and the compensation committee.

Lastly, the shareholders themselves must take greater charge of the situation. Only a handful of shareholders are known for their activism in aligning executive compensation with shareholder goals (CalPERS and Warren Buffet, for example). When such shareholders exercise their rights and demand congruence, they often receive it. However, most shareholders are relatively apathetic. They do not understand the issue of executive compensation and are unwilling to fight for better alignment of objectives. To achieve alignment, shareholders must become more active.

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