Two companies, one a multi-billion dollar Chinese SOE and the other a $250M distributor, are forming a joint venture to be based on the west coast. The JV is expected to be a $30M company in 5 years. They have identified a well qualified candidate for president. The candidate will be responsible for launching the company and everything that entails. There seems to be some disagreement regarding what should be included in the relocation package. The candidate will have to move from the east coast to the west coast. We are considering full pack and move, paying closing costs for new home, paying sale costs,
What should be included in a relocation package for the president of a JV that is about to be launched?
Answers
Sounds like you have covered almost everything.
Assistance with private schooling for kids would help, if he has school age kids.
Pre-arrival hiring of his admin assistant, who is best a local, to help with it all.
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Thanks Jim. Is that appropriate for a startup JV?
I think you have it all, but you might want to put some parameters around the house hunting trips. I would want to limit expensive hotels and meals for this activity, much as you would for ordinary travel. (It could get out of control, if you don't.)
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Thanks Linda. At issue is that the U.S. company is balking at what I outlined above. Let's call that the gold relo package. They want to offer the "tin foil" package and want only to pay for the move because the company is a startup (there is no equity component). I am advising them otherwise. I fear that without the gold package we'll lose the candidate. Am I off base? Is a $150K+ relo package typical for a startup president with a unique skill set?
What if the new CEO has problems selling his east coast house? Are you planning to purchase it? That situation has be accounted for. Best to work with a relocation company (e.g., Prudential) that will take care of everything. I've done this move three times and I can tell you that the "gold" package is the only way to go. I've experienced both anything but the gold package will increase stress and have an impact. Reduce stress, and get your new CEO off to a strong start. Otherwise, the pressure of the nice will slow him/her down.
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As to Marc's issue with selling an East Coast house.
I live on Long Island (on the water) and it will take approx 5 years before I will be able to sell my house for a decent amount (assuming we don't have another hurricane).
Do you want that President to carry possibly two mortgages?
I have made multiple moves, all with a "gold" package and relocation company support. None of those moves, including one half way across the country, approached the $150K value you mention. I suspect the weakened economy and focus on cost saving have made gold relo packages more rare. They remain a great way to reduce stress, promote executive focus on work and gain buy-in from a spouse who may not be as excited about moving.
In my mind, a private school subsidy is something beyond the gold level for this position. It is nice to have but probably not critical to the offer. No one has mentioned providing job assistance in the new location for the spouse. Although perhaps not applicable in this specific case, it is something to consider.
Were I in your shoes, I would try to understand and mitigate the specific objections of the US distributor. Such businesses are often lower margin, making cost containment and aversion to spending a constant focus. The distributor may have little history relocating employees, particularly more senior ones. That could require you to do more to demonstrate the market competitiveness of your recommendation.