Executive pay management strategy
Executive compensation strategy, this chapter defines a framework and process that facilitate the development of an Executive compensation strategy, which can be used to rationalize and communicate organizational philosophy and decision making related to pay levels, pay mix, and performance measures and standards. Because one critical challenge for strategic compensation practitioners is convincing their employers that executive compensation strategy goes well beyond simply knowing how much their competitors pay. Unfortunately, in some organizations, the human resources function continues to be viewed merely as a cost center that is incapable of contributing to the company’s strategic direction.
Sample executive compensation strategy statement.Under the foregoing circumstances, the following compensation strategy was recommended and raletimately approved by the board of directors(including a representative of the ESOP).Compensation mix: Executive compensation will consist of the following components of pay: Base salary, to compensate executives for performing to expected levels of experience and competence.Annual incentive awards, to reward executives for attaining aggressive strategic, financial, and operational goals viewed as critical to the continued growth and profitability of the company. Long-term incentives, in the form of stock opiongs, to allow executives to share reasonably in the future growth of the company, to align their economic interests with those of the ESOP, and to serve perceived retention needs. Restricted stock may be used in rare circumstances to address specific retention or recruiting needs.
