By Steven Balsam
Basic readers don't know why humans should still care approximately what executives are paid and why they're paid the way in which they're. that is the reason that The Wall road magazine, Fortune, Forbes, and different well known and practitioner guides have ordinary assurance on them. This booklet not just proposes a reason--executives want incentives in an effort to maximize company price (economists name this "agency theory")--it additionally describes the character and layout of government repayment practices. these incentives can take the shape of advantages (salary, inventory options), perquisites (reflecting the prestige of the administrative in the organizational tradition.
This ebook is necessary since it takes the weather of an government repayment package deal aside, examining them within the contexts of either fiscal conception and company perform after which explains how, less than various stipulations, one could build a reimbursement package deal that optimizes an executive's and a corporation's functionality.
* offers an aim research of present govt reimbursement practices
* Comprehensively stories of educational literature and extant practice
* Explains and illustrates some of the parts of the reimbursement package
* Discusses the inducement, monetary reporting, tax, political, fairness, and enterprise worth results of these components
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Additional resources for An Introduction to Executive Compensation
To start, I will define these components. A. Salary Salary is the fixed contractual amount of compensation that does not explicitly vary with performance. However, it can be affected by performance, as good Benefit less related costs. 1 35 36 Chapter 2: Overview of the Compensation Package performance can lead to higher salary in future periods. For example, the employment agreement between the Eastman Kodak Company and George M. C. Fisher, its Chief Executive Officer (CEO), entered into on October 27, 1993, explicitly states the following:2 The Executive shall be paid an annualized Base Salary, payable in accordance with the regular payroll practices of the Company, of $2,000,000.
Registrants are not required to disclose target levels with respect to specific quantitative or qualitative performance-related factors considered by the committee (or board), or any factors or criteria involving confidential commercial or business information, the disclosure of which would have an adverse effect on the registrant. (l) Performance Graph. 1 Item 402 of SEC Regulation S-K 33 (A) a published industry or line-of-business index; (B) peer issuer(s) selected in good faith. If the registrant does not select its peer issuer(s) on an industry or line-of-business basis, the registrant shall disclose the basis for its selection; or (C) Issuer(s) with similar market capitalization(s), but only if the registrant does not use a published industry or line-ofbusiness index and does not believe it can reasonably identify a peer group.
3. Registrants need not include in the salary column (column (c)) or bonus column (column (d)) any amount of salary or bonus forgone at the election of a named executive officer pursuant to a registrant program under which stock, stock-based or other forms of non-cash compensation may be received by a named executive in lieu of a portion of annual compensation earned in a covered fiscal year. , restricted stock awards 16 Chapter 1: Introduction (column (f )); options or SARs (column (g)); all other compensation (column (i)), or, if made pursuant to a long-term incentive plan and therefore not reportable at grant in the Summary Compensation Table, a footnote must be added to the salary or bonus column so disclosing and referring to the Long-Term Incentive Plan Table (required by paragraph (e) of this item) where the award is reported.