Post on 10-Apr-2015
transcript
EXECUTIVE EXECUTIVE COMPENSATION PACKAGECOMPENSATION PACKAGE
MEANING OF EXECUTIVE COMPENSATION
Executive compensation is how top executives of business corporations are paid.
The purpose of compensation of an executive is for an individual who is in a management position at highest levels.
This category includes presidents vice presidents managing directors and general managers.
FEATURES OF EXECUTIVE COMPENSATION
Managerial compensation cannot be compared to the wage and salary schemes meant for in other employees in organizations.
Executives are denied the privilege of having unionized strength.
Secrecy is maintained in respect of executive compensation.
Executive pay is not supposed to be based individual performance rather on organizational performance
MEANS OF COMPENSATION
There are four basic tools executive compensation packages in organization. These are:
Base salary.Allowances.Incentives.Perquisites.
COMPENSABLE FACTORS
The US compensation institutes Phoenix plan uses compensable factors:
Job related experience. Training time required. Frequency of review of work. Utilization of independent choice. Frequency of reference to guidelines. Frequency of work transferred through supervisor Analytical complexity. Time spent in processing information.
INDIAN PRACTICES
Executive compensation in India is built around three important factors.
Job complexity.Employers ability to pay.Executive human capital.
PRIVATE SECTOR vs. PUBLIC SECTOR
The salary of top executives of public sector are miserable compared to private sector .
EXAMPLES:S B I of India chief is paid 10%of HDFC Bank
Managing DirectorBHEL’S chief is getting about 10 to 12 lakhs
per annum as against ABB ‘S MD getting nearly 40 to 50 lakhs
Compensation System Components
BASE SALARYCONVEYANCE
SPECIAL ALLOWANCESGRATUITY
HRA(HOUSE RENT ALLOWANCES)TRAVELLING ALLOWANCES
PROVIDENT FUNDMEDICAL CLAIMBANK FACILITY
BONUSPROVIDING CARS
STOCKS AND SHARE
EXECUTIVE COMPENSATION GIVEN IN DIFFERENT COMPANIES
EXECUTIVE COMPENSATION OF ORACLE
SALARY INCLUDES
Basic salary Conveyance Special allowances Gratuity Provident fund H R A( House Rent Allowances) Traveling Allowances Medical claim Bank facility
IBM EXECUTIVE COMPENSATION PACKAGE
Two main components of executive compensation package Base salary and Cash Incentive/ Bonus Long-term Incentive Compensation
Three main elements drive compensation package Competitive marketplace Complexity of leading IBM Gerstner performance
Executive Compensation at Disney: Base Salary Performance base annual bonus
Net Income, ROE, ROA, EPS Stock or cash awards
Stock options Initial employment, promotion, renewal or fully vested.