WGU D355 TASK 2 | TOTAL REWARDS | 2026/2027 UPDATE
WESTERN GOVERNORS UNIVERSITY | MBA PROGRAM
Complete Task with 100% Correct Solutions | A+ Graded
Name: [Student Name]
Course: D355: Total Rewards
Instructor: [Instructor Name]
Date: [Date]
INTRODUCTION
This task presents a comprehensive analysis and redesign of the executive compensation
program for a hypothetical publicly traded organization, "Apex Innovations, Inc." (a mid-cap
technology firm). The following guide provides the complete solution framework required to
meet WGU D355 Task 2 rubric criteria, focusing on pay-for-performance alignment, regulatory
compliance, and shareholder value creation.
SECTION 1: EXECUTIVE COMPENSATION ANALYSIS
1.1 Current Executive Compensation Structure Apex Innovations currently utilizes a
compensation mix for its Named Executive Officers (NEOs) that is heavily weighted toward base
salary (60%) and discretionary bonuses (20%), with underweighted long-term incentives (LTI)
(20%). This structure has led to a lack of alignment between executive pay and shareholder
returns.
1.2 Peer Group Benchmarking A peer group of 15 technology companies of similar revenue
($500M–$1B), industry, and geographic footprint was established.
• Current Positioning: Apex base salaries are positioned at the 75th percentile, while total
compensation sits at the 50th percentile.
• Issue: High base salary creates entitlement rather than performance drive.
, 1.3 Pay-for-Performance Alignment Current alignment is weak. The bonus plan is discretionary,
lacking specific financial targets. Over the last three years, executive pay increased by 15% while
Total Shareholder Return (TSR) decreased by 5%.
• Correction needed: Shift mix to emphasize variable, at-risk pay.
1.4 CEO Pay Ratio Analysis As required by Dodd-Frank, the 2025 CEO Pay Ratio was calculated at
280:1.
• Median Employee Salary: $85,000.
• CEO Total Compensation: $23.8 Million.
• Analysis: This ratio exceeds the industry median of 250:1. While high, the ratio is
justifiable only if TSR is top-quartile, which is currently not the case.
1.5 Competitive Market Positioning The current strategy targets the 75th percentile for base
salary and 50th for total cash.
• Strategic Shift Recommendation: Move to a "50th percentile base / 75th percentile total
compensation" model. This reduces fixed costs and incentivizes high performance to
unlock higher total earning potential.
SECTION 2: PAY EQUITY ANALYSIS
2.1 Internal Equity Analysis
• Job Evaluation and Leveling: A job evaluation using the Hay Group method confirmed
that the CEO role is appropriately graded above the CFO and COO. However,
compression was identified between the VP level and C-suite, where VPs are paid 95% of
C-suite base pay, reducing the promotional incentive.
• Diversity Pay Gap Analysis: An adjusted pay gap analysis controlling for role, tenure, and
performance revealed a 2% unexplained gap in executive pay favoring male executives.
Corrective salary adjustments are recommended for two female NEOs to ensure
statistical parity.
2.2 External Equity Analysis
• Market Benchmarking: External data from Willis Towers Watson and Mercer indicates
Apex is lagging in Long-Term Incentives (LTI).
• Industry Comparisons: Competitors utilize a higher mix of Performance Shares (PSUs)
compared to Apex’s reliance on Stock Options.
WESTERN GOVERNORS UNIVERSITY | MBA PROGRAM
Complete Task with 100% Correct Solutions | A+ Graded
Name: [Student Name]
Course: D355: Total Rewards
Instructor: [Instructor Name]
Date: [Date]
INTRODUCTION
This task presents a comprehensive analysis and redesign of the executive compensation
program for a hypothetical publicly traded organization, "Apex Innovations, Inc." (a mid-cap
technology firm). The following guide provides the complete solution framework required to
meet WGU D355 Task 2 rubric criteria, focusing on pay-for-performance alignment, regulatory
compliance, and shareholder value creation.
SECTION 1: EXECUTIVE COMPENSATION ANALYSIS
1.1 Current Executive Compensation Structure Apex Innovations currently utilizes a
compensation mix for its Named Executive Officers (NEOs) that is heavily weighted toward base
salary (60%) and discretionary bonuses (20%), with underweighted long-term incentives (LTI)
(20%). This structure has led to a lack of alignment between executive pay and shareholder
returns.
1.2 Peer Group Benchmarking A peer group of 15 technology companies of similar revenue
($500M–$1B), industry, and geographic footprint was established.
• Current Positioning: Apex base salaries are positioned at the 75th percentile, while total
compensation sits at the 50th percentile.
• Issue: High base salary creates entitlement rather than performance drive.
, 1.3 Pay-for-Performance Alignment Current alignment is weak. The bonus plan is discretionary,
lacking specific financial targets. Over the last three years, executive pay increased by 15% while
Total Shareholder Return (TSR) decreased by 5%.
• Correction needed: Shift mix to emphasize variable, at-risk pay.
1.4 CEO Pay Ratio Analysis As required by Dodd-Frank, the 2025 CEO Pay Ratio was calculated at
280:1.
• Median Employee Salary: $85,000.
• CEO Total Compensation: $23.8 Million.
• Analysis: This ratio exceeds the industry median of 250:1. While high, the ratio is
justifiable only if TSR is top-quartile, which is currently not the case.
1.5 Competitive Market Positioning The current strategy targets the 75th percentile for base
salary and 50th for total cash.
• Strategic Shift Recommendation: Move to a "50th percentile base / 75th percentile total
compensation" model. This reduces fixed costs and incentivizes high performance to
unlock higher total earning potential.
SECTION 2: PAY EQUITY ANALYSIS
2.1 Internal Equity Analysis
• Job Evaluation and Leveling: A job evaluation using the Hay Group method confirmed
that the CEO role is appropriately graded above the CFO and COO. However,
compression was identified between the VP level and C-suite, where VPs are paid 95% of
C-suite base pay, reducing the promotional incentive.
• Diversity Pay Gap Analysis: An adjusted pay gap analysis controlling for role, tenure, and
performance revealed a 2% unexplained gap in executive pay favoring male executives.
Corrective salary adjustments are recommended for two female NEOs to ensure
statistical parity.
2.2 External Equity Analysis
• Market Benchmarking: External data from Willis Towers Watson and Mercer indicates
Apex is lagging in Long-Term Incentives (LTI).
• Industry Comparisons: Competitors utilize a higher mix of Performance Shares (PSUs)
compared to Apex’s reliance on Stock Options.
