Executive compensation plans always come from various shapes and sizes. They usually depend on the objectives of a particular company which aims to achieve, fit into the desired complexity of the plan, company’s demographics which includes the size, revenue, sector, and the legal stipulations that basically applies for the executive pay. An executive compensation, by definition, speaks about an executive pay which focuses on the remuneration designed by the business leaders, senior management, and executive level employees.
This includes benefits in terms of salaries, perks, insurances, incentives, etc. The senior management and executive level employees play a very essential role in making effective strategies and taking huge importance of the decisions. In order for them to be always motivated and satisfied, set the right benefits for them. This type of compensation is negotiable. They can defy the norms followed by the company especially when it comes to the compensation of the regular employees.
10+ Executive Compensation Plan Samples
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Types of Executive Compensation
We must consider that there are a lot of basic structural elements of executive compensation that appears to be more constant incorporated with strategies and implementations. Below are the list of the types of executive compensation.
- Base Pay – this is one of the most familiar executive compensation. Even though the annual pay adjustments used to run smoothly higher than the percentage offered at certain employee levels, the survey conducted in the year 2014 reported that there is a slight decrease in base pay increases as compared to the adjustments made in the previous year.
- Short-term incentive – this is typically a performance-based used to create an effective strategy and goal achievement. Also, take note that metrics are the combination of the revenue, profit, operational, and customer service related goals which includes a specific factor that may contribute to the individual’s performance goals.
- Long-term incentive – this type of incentive is designed to reward long term performance-based goals. The awards can be made by either cash or equity plus a number of features and alternatives which can be used to meet the needs of the organization.
- Benefits – some benefits are made to simply enhance the versions of those that are previously offered to the employees who do not belong the executive workforce. This may include fully paid medical insurance, supplemental pension plans, extra levels of life insurance, etc.
- Perks – this can be a useful tool to attract the key executive talent. However, this is only common in employees who belong in the uppermost executive job titles and in private sectors where other factors are only less of a concern.
In setting for an executive compensation, a Board is usually responsible in considering the mix of salary and benefit and performance-based compensation.
What are the relevant roles in terms of executive compensation determinations?
- Board of directors – they are responsible in making the decisions pertaining to the executive compensation. They often rely from the input made by the compensation committee and compensation consultants.
- Compensation committee – this is composed of independent directors who is responsible for designing the executive compensation program and determining the executive compensation as well. They can also tax and accounting experts mostly in complex situations.
- Compensation consultants – these are the independent advisors that provides advices to matters involving the executive compensation.
What are the tips in doing a negotiation for your executive compensation?
Do your research, understand that your value is not tied to your current compensation level, remember that an executive compensation is not a salary, don’t be the first one to name a price, and be prepared to provide a counter offer.
If you want to see more samples and format, check out some executive compensation plan samples and templates provided in the article for your reference.
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