5 components of executive compensation
Posted by zonan | Posted in
1.Executive Base Salaries
A base salary is given to the executive on a Consistent payment made each period regardless of the number of hours worked in the period. This salary is differing to other organization according to their salary system. Survey data on executive salary are often reviewed by Boards of Director to ensure that their organization is competitive
Example: The management executive at EXXON MOBILE will have monthly basic salary at US 5000.00
2.Regular benefits which available with other non executive employees
Example: Traditional retirement, Health Insurance, and Vacation Plans
3.Supplemental benefits which non executive employees not receive
Example: Executives health plan with no co-payment and with no limitation on deductible or with physician choice. The other include the Corporate –owned insurance on the life of executive.
4.Executives Perks ( perquisites)
Perquisites usually non-cash items for executive like using company car, using company transportation, provide car allowances, giving free financial planning, stress counseling, health club, first class air traveling and many more.
5.Annual bonuses and incentive
It can be determined in several ways. First is using the a discretionary system whereby the CEO and the Board Of Director decide bonuses. Second way is to specific measure such a return on Investment, earning per share, and net profit before taxes.
6.Performance incentive ( short term-long term)
The use is to tie executive compensation to long term growth and success of the organization. Short term reward based on quarterly or annual performance.
Example of long term incentive: Stock Option Plans. A stock option gives individual the right to buy stock in a company, usually at an advantageous price.
A base salary is given to the executive on a Consistent payment made each period regardless of the number of hours worked in the period. This salary is differing to other organization according to their salary system. Survey data on executive salary are often reviewed by Boards of Director to ensure that their organization is competitive
Example: The management executive at EXXON MOBILE will have monthly basic salary at US 5000.00
2.Regular benefits which available with other non executive employees
Example: Traditional retirement, Health Insurance, and Vacation Plans
3.Supplemental benefits which non executive employees not receive
Example: Executives health plan with no co-payment and with no limitation on deductible or with physician choice. The other include the Corporate –owned insurance on the life of executive.
4.Executives Perks ( perquisites)
Perquisites usually non-cash items for executive like using company car, using company transportation, provide car allowances, giving free financial planning, stress counseling, health club, first class air traveling and many more.
5.Annual bonuses and incentive
It can be determined in several ways. First is using the a discretionary system whereby the CEO and the Board Of Director decide bonuses. Second way is to specific measure such a return on Investment, earning per share, and net profit before taxes.
6.Performance incentive ( short term-long term)
The use is to tie executive compensation to long term growth and success of the organization. Short term reward based on quarterly or annual performance.
Example of long term incentive: Stock Option Plans. A stock option gives individual the right to buy stock in a company, usually at an advantageous price.
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