Recruitment-41

There are five basic tools to compensation or remuneration. * a base salary * short-term incentives, or bonuses * long-term incentive plans (LTIP) * employee benefits * perquisites, or perks

In In a typical modern US corporation, the CEO and other top executives are paid salary plus short-term incentives or bonuses. This combination is referred to as Total Cash Compensation (TCC). Short-term incentives usually are formula-driven and have some performance criteria attached depending on the role of the executive. For example, the Sales Director's performance related bonus may be based on incremental revenue growth turnover; a CEO's could be based on incremental profitability and revenue growth. Bonuses are after-the-fact (not formula driven) and often discretionary. Executives may also be compensated with a mixture of cash and shares of the company which are almost always subject to vesting restrictions (a long-term incentive). To be considered a long-term incentive the measurement period must be in excess of one year (3-5 years is common). The vesting term refers to the period of time before the recipient has the right to transfer shares and realize value. Vesting can be based on time, performance or both. For example a highly paid CEO would get 1 million in cash, and 1 million in company shares (and share buy options used). Other components of an executive compensation package may include such perks as generous retirement plans, health insurance, a chauffered limousine, an executive jet[1], interest free loans for the purchase of housing, etc.

All text is available under the GNU free documentation lisence

Links

Index page

Previous:  E- Executive compensation - Introduction

Next:  E - Executive Search

Find Recruitment Consultant jobs here