Executive Compensation
Jing Jia
(School of Management, NJIT, Newark, NJ)
Abstract
This paper sums up the theoretical background for executive compensation and depicts a comprehensive and contemporary situation of pay practices. It also foresees future trends for executive compensation. Topics discussed in the paper include CEO incentive compensation principle, alternative approaches to executive compensation (including salary, bonus, restricted stock, and executive stock options), comparison of the restricted stock and stock options, principles of executive pay design, and the relation between CEO performance and pay.
Keywords: Executive compensation, incentives, executive compensation plan design, CEO performance and pay, key component
Theoretical background
Executive compensation is how top executives of business corporations are paid . Although there are different pay practices methods for CEO stretching across industries and enterprises, the most administrative executive compensation contains four basic components which are: salary and wages, an annual bonus bind to performance, executive stock options, long-term incentive (including restricted stock plans and multi-year-based performance) . Moreover, executives also can get what employee benefits offered, such as health insurance, retirement benefit, life insurance and so on. When compared with other level management, CEO also have good conditional and long term employment contract with a base salaries, annual bonus payment tied with performance and not influenced by the changes of enterprise control.
The key Components of executive compensation
1. Base Salaries excludes any income that an individual may be permitted to earn outside of duties to the applicant organization. The ...