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.