Since the acquisition of Digital Equipment in 1998, Compaq Computer, the second largest computer company in the world and the largest supplier of personal computers, has been undergoing changes in terms of employee benefit and compensation policies. Although the multinational corporation has not an overall strategy regarding these issues, its aim is to provide a competitive package in the local environment, with general recommendations for subsidiaries to follow. Compaq’s standards include to provide all employees with a minimum coverage for retirement, life and medical insurance, short and long term disability, and it’s only when the state systems are not adequate that the country is able to have additional private provisions.
One of the main recommendations on pension provision coming from the company’s headquarters in Houston and Munich is to switch to define contribution (DC) plans. As a result of this, most of the group’s old defined benefit (DB) plans are now closed to new members. Although this process is at different stages in the company’s Europe-based subsidiaries, some of them have completed it successfully.
Another recommendation from the company’s headquarters is that subsidiaries should take into account international pooling arrangements, although in some countries local providers are often considered able to offer better conditions.
In the investment field, Compaq has not made a real move to co-ordinate strategies more so far, due to several obstacles such us local preferences and risk acceptance criteria. However, it exists some short of linking in terms of the use of some investment managers whose names are present in the portfolios of several subsidiaries.
In terms of benefits, Compaq’s arrangements vary from one country to the other due to the fact that applying more flexible benefits plans is not always possible, especially when dealing with all pension plans which have been running for a while.