Question

You are a Director - Human Resources for a Charlotte regional company in teh finanacial services business. You have been asked to make recommenations for an executive compensation package for your CEO/ President; Vice Presidential level executives and your Operations Managers.

Slect a financial services company that is publis within the Charlotte regions. Research the current compensation of the officers of the company. Develop a compensation survey about your assignment to review executive compensation. Also determine what companies you would survey. Also what more information internally would you need to obtain.

What would be the elements of the executive compensation program.

Answer 1

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Incentivizing executives to meet business objectives is a critical factor in designing executive compensation plans. Organizations can choose from several well-established methods to pay for the performance of executives, often with significant tax advantages to the executive and the employer. It has become increasingly more important to ensure that the public and elected officials can readily grasp the reasonableness of executive compensation plans—especially in public corporations. Over the past decade, executive compensation plans have come under significant regulatory and political attack.

Within the realm of human resource management, the field of compensation and benefits has emerged as an area of specialization. As with other professions, specialization has proved to be a pathway to financial success for HR professionals. See HR Compensation: It Pays to Specialize. The role of HR with regard to designing and managing an executive compensation program is varied. The most basic role an HR professional plays is being in a position to inform management of the benefits, costs and array of options in launching or improving an executive compensation program. This responsibility also includes assessing the adequacy of the technology being used in the incentive compensation program. HR professionals are key in determining what in-house and outside expertise is necessary and sufficient to handle an executive compensation program. Almost every organization needs some degree of outside expertise for the design and management of an effective executive compensation program.

Components Of An Executive Compensation Plan:

Base Salary
The standard wage paid to an executive that typically is the largest share of an annual compensation package.

Bonuses (Short-term incentives)
Distributions for annual milestones or reaching incentivized goals that are typically cash-based.

Long-term incentives
Vehicles used to share long-term value creation with employees. These are often tied to equity or enterprise value.

Benefits
Non-cash compensation provided to an employee on an annual basis. These typically include elements like health and life insurance, defined benefit or contribution plans, and paid vacations.

Perquisites
Privileged grants to employees in addition to their other compensation. These can include everything from a company car to a business-paid cell phone.