Executive Compensation

  1. What industries have the highest-paid CEOs?
    • Health Care
    • Technology
  2. What industries have the lowest-paid CEOs?
    • Consumer Services
    • Telecommunications
    • Utilities
  3. What is Compensation?
    Represents the rewards employees receive for performing their job.
  4. What is Intrinsic Compensation?
  5. What is Extrinsic Compensation?
  6. What are the Elements of Core Compensation?
    • The main things used for compensation.
    • Base Pay
    • Base Pay Adjustments
  7. What are examples of Base Pay?
    • Hourly Pay
    • Annual Salary
  8. What are examples of Base Pay Adjustments?
    • COLAs
    • Incentive Pay
    • Skill-based Pay
    • Merit Pay
    • Seniority Pay
  9. What is Fringe Compensation?
    • Non-monetary rewards.
    • Ex: Legally-required benefits, Discretionary benefits
  10. Legally Required Benefits are based on what?
    Federal Legislation
  11. 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
  12. What are examples of Discretionary Benefits?
    • Protection programs
    • Pay-for-time-not-worked
    • Services
  13. 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
  14. What are characteristics of a Highly Compensated Employee?
    • A 5% owner at any time during the year or the preceding year
    • An officer
  15. 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
  16. 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
  17. What are examples of Enhanced Benefits?
    • Supplemental life insurance
    • Supplemental retirement
    • Prerequisites
  18. What are Common Perquisites?
    • Company car
    • Financial services
    • Legal services
    • Recreational facilities
    • Travel perks
    • Residential security
    • Tickets to sporting events
  19. Who are Key Players in a company?
    • Compensation consultants
    • Board of directors
    • Compensation committees
  20. 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
  21. 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
  22. 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
  23. 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
  24. Regarding International Competitiveness, what is the SEC rule?
    SEC rules require the disclosure of executive compensation in the U.S. companies
Card Set
Executive Compensation
Executive Compensation