What Are the Components of Executive Compensation?

Executive Compensation
=> Base salary
=> Incentive pay, with a short-term focus, usually in the form of a bonus
=> Incentive pay, with a long-term focus, usually in some combination of stock awards, option awards, non-equity incentive plan compensation
=> Enhanced benefits package that usually includes a Supplemental Executive Retirement Plan (SERP)
=> Extra benefits and perquisites, such as cars and club memberships
=> Deferred compensation earnings

Executive Compensation
Many organizations, especially large ones, administer executive compensation somewhat differently than compensation for lower-level employees. An executive typically is someone in the top two levels of an organization, such as Chief Executive Officer (CEO), President, or Senior Vice-President. As Figure shows, the common components of executive compensation are salaries, annual bonuses, long-term incentives, supplemental benefits, and perquisites.

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