Internal Memo: Compensation Package for Expatriate Team to Mexico (Other (Not Listed) Sample)

TRANSATLANTIC MANUFACTURERS 
INTERNAL MEMO
To: Mr. Dwayne Jacobs, CEO, Trans-Atlantic Manufacturers
From: Mr. Bob Myles, Total Rewards Director
Date: July 16, 2016
Re: Compensation Package for Expatriate Team to Mexico
This is in response to your request for an international compensation package for the ten executives who will be deployed to the new overseas plant in Mexico next year.
The proposed package as outlined in this memo is informed by comparisons of the cost or living and purchasing power between the U.S. and Mexico. In light of the most recent data, consumer prices and rent in the in the United States are 161 percent higher than in Mexico (Numbeo, 2016). However, local purchasing power is 96% higher in the U.S. compared to Mexico, indicating that the cost of living in Mexico is 67% cheaper than in the U.S: ([161/96]100) – 100
With this difference in the cost of living in mind, the ten expatriates’ domestic base salary should be adjusted downwards by 67%, which will set their new salary at $26, 400. This is in line with corporate practices around the world whereby base compensation for expatriates is based on the local cost of living.
Additional Benefits
Considering that the ten expatriates include C-level management executives, it is recommended that the company offer the full expat package not only to make their transition into a foreign workplace environment smooth and comfortable, but also to act as an incentive for the new assignment. Under this package, the company should meet the following expenses.
Relocation
As part of the company’s commitment to make transfer of employees to a foreign country affordable and convenient, the company should cover the costs of relocation which will include:
Processing and paying for visas
Booking and paying for flights
Hotel expenses
Work and residence permits
Shipment of household goods
One-time lump sum payment to cover out-of pocket expenses
Allowances
Housing
The expats are entitled to a monthly housing allowance adjusted to local rent costs in a safe and high end part of the city. The allowances should also cover domestic help and utility bills, as well as security guards. If the infrastructure in the host country is poor, the company should also consider investing in electric generators and water storage facilities.
Education
As is the norm for expats working in foreign countries, they should receive a maximum value education per child, until the age of 18. This may entail paying for private boarding school either in the U.S. or in the host country, depending on the employees’ preferences.
Car and Travel
To make their work easier, the company has two options to meet the expats’ travel needs. One is to provide a company-leased car or a monthly allowance to cover the cost of purchasing a car locally. Monthly allowances should also cover stipends like fuel, insurance, and maintenance.
Hardship Allowances
The expatriates are moving to a less developed country compared to the U.S. The change in lifestyle required to adjust to local living standards for the expats and their families should be compensated accordingly. The company should provide this incentive to encourage the executives to live and work in a country where they will miss on the many luxuries and privileges they are used to in the U.S. under the International Expatriate Hardship Premiums, Mexico is rated 3, denoting a high degree of hardship (Xpatulator.com, 2012). Accordingly, the expatriates are entitled to a 30% salary premium. Using their base salary of $26, 400, they should receive a monthly hardship allowance of $7, 920, bringing their base salary to $34, 320, excluding hous...