executive level rewards - compensation management - manu melwin joy
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Executive Level RewardsCompensation Management
Prepared By
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Manu Melwin JoyAssistant Professor
Ilahia School of Management Studies
Kerala, India.Phone – 9744551114
Mail – [email protected]
Executive Level Rewards• Executive compensation
or executive pay is composed of the financial compensation and other non-financial awards received by an executive from their firm for their service to the organization.
Executive Level Rewards• It is typically a mixture of
salary, bonuses, shares of or call options on the company stock, benefits, and perquisites, ideally configured to take into account government regulations, tax law, the desires of the organization and the executive, and rewards for performance
Executive Level Rewards• Executive Compensation
packages are designed by a company's Board of Directors, typically by the Compensation Committee consisting of independent directors, with the purpose of incentivizing the executive team, who have a significant impact on company strategy, decision-making, and value creation (Pay for Performance) as well as enhancing Executive Retention.
Executive Level Rewards• To help accomplish these goals,
Executive Compensation has four distinct characteristics:– Pay Package Design:
Executive pay arrangements typically consist of six distinct compensation components: salary, annual incentives, long-term incentives, benefits, perquisites and severance/change-in-control agreements.
Executive Level Rewards• To help accomplish these goals,
Executive Compensation has four distinct characteristics:
– Equity Compensation: The
majority of compensation of
most executive pay packages
comes in the form of
company stock.
Executive Level Rewards• To help accomplish these goals,
Executive Compensation has four distinct characteristics:– Performance-Contingent
Pay: Executive pay packages are designed so that the bulk of an executive's compensation is contingent on a company achieving pre-established criteria of specific financial results and/or strategic objectives.
Executive Level Rewards• To help accomplish these goals,
Executive Compensation has four distinct characteristics:– Vesting Schedules: Even
after financial or strategic criteria for an award is met, full ownership of the equity award are often conditioned on the executive's compliance with certain covenants.