What industries have the highest-paid CEOs?
What industries have the lowest-paid CEOs?
- Consumer Services
What is Compensation?
Represents the rewards employees receive for performing their job.
What is Intrinsic Compensation?
What is Extrinsic Compensation?
What are the Elements of Core Compensation?
- The main things used for compensation.
- Base Pay
- Base Pay Adjustments
What are examples of Base Pay?
What are examples of Base Pay Adjustments?
- Incentive Pay
- Skill-based Pay
- Merit Pay
- Seniority Pay
What is Fringe Compensation?
- Non-monetary rewards.
- Ex: Legally-required benefits, Discretionary benefits
Legally Required Benefits are based on what?
What are examples of Legally Required Benefits?
- Promote worker safety and health
- Maintain family income
- Assist families in crisis
- Provide assistance in case of Disability or Unemployment
What are examples of Discretionary Benefits?
- Protection programs
What are characteristics of Key Employees?
- An officer making at least $160,000 in 2009
- A 5% owner
- A 1% owner making at least $160,000
What are characteristics of a Highly Compensated Employee?
- A 5% owner at any time during the year or the preceding year
- An officer
What are examples of Executive Compensation?
- Current or annual core compensation
- Deferred core compensation: stock compensation
- Deferred core compensation: golden parachutes
- Enhanced protection program
- Benefits and prerequisites
What are Golden Parachutes?
- Provide executives pay & benefits following termination to due to ownership changes
- Income and benefits for 1-5 years
- Not triggered by retirement, resignation or disability
- Treated as a business expense
What are examples of Enhanced Benefits?
- Supplemental life insurance
- Supplemental retirement
What are Common Perquisites?
- Company car
- Financial services
- Legal services
- Recreational facilities
- Travel perks
- Residential security
- Tickets to sporting events
Who are Key Players in a company?
- Compensation consultants
- Board of directors
- Compensation committees
What are the duties of Compensation Consultants?
- Propose recommendations
- Develop packages based on strategic analysis. Ex: External market context, Internal factors
- Possible conflicts of interest
What are the duties of Board of Directors?
- Represent shareholders' interests
- Usually 15 members including CEOs, executives, community leaders, and professionals
- Give final approval to recommendations
- Are compensated well for services
What is a Compensation Committee and what is its duties?
- Usually other boar of directors' members
- Review consultants' recommendations
- Discuss assets and liabilities
- Make final recommendations
What are examples of Executive Compensation Theories?
- Agency theory - Shareholders give control to executive, but interests my conflict
- Tournament theory - Compensation pay based on productivity vs who they are
- Social comparison theory - Compensation compared to others
Regarding International Competitiveness, what is the SEC rule?
SEC rules require the disclosure of executive compensation in the U.S. companies