J. Perez Foods (a) Case Writeup Essay

1603 Words Mar 23rd, 2010 7 Pages
J. Perez Foods (A) Case Writeup

Dear Jamie Jr,

From my observations, there is a massive, overarching family-business conflict embroiling you and your siblings (mainly Mercedes) that has the potential to not only undermine the cordial familial relationships between your family members, but also has the potential to destroy your family’s reputation in the Dominican business world. As a consultant to the Perez Family whose purpose is to bring stability to the ownership group, I will address 3 main areas of contention that if mitigated, I believe have the potential to resolve the current situation. My first area of contention is the outward personality and emotions you have displayed throughout the series of events. I understand that
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A second concept, in-line with your emotional appearance, which you may want to consider, is your physical appearance and arrangement. Although most of your siblings are content with the fact that as the person with the most at stake in the business and the person who works the most in the business, you should reap a greater benefit than the rest of them from the earnings, there is definitely a growing discontent with your excessively lavish lifestyle and the compensation arrangements for management, in conjunction with the recent significant decline in return on equity. As the residual claimants to profits, equity holders are often at the mercy of the management and your siblings obviously feel that there is a misalignment of incentives between them and the management. This misalignment insinuation has also built up a resistance against their propensity to trust you. I think one solution you can take to mitigate this problem is to actively align the managers incentives though some type of options compensation. Instead of your current system, you should bring in a reputable compensation consulting firm to devise the salaries of your management and give them the ability to use options or other methods to transparently tie the incentives together. You can also have your siblings establish a compensation committee, similar to steps taken in public corporations, to

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