The Bp Amoco Merger: Executive Compensation

Abstract

This case is designed for an MBA course on management planning and control systems, an MBA course on mergers and acquisitions, an MBA course on strategy implementation, or any course on executive-compensation systems. It exposes students to executive-compensation plans, the design of performance-measurement and incentive-compensation systems to facilitate the implementation of strategy, and issues that arise in postmerger integration. Significant differences in executive compensation at British Petroleum and Amoco Corporation before the merger of the two companies pose interesting challenges to the successful integration of the two executive teams after the merger. Students are asked to evaluate the postmerger executive-compensation plan for BP Amoco in light of the company's postmerger strategy, differences in the premerger executive-compensation plans, and issues surrounding postmerger integration.

Keywords: mergers and acquisitions, executive compensation, incentives, strategy implementation