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EXECUTIVE

COMPENSATION 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 Director
BHEL’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
EXECUTIVE COMPENSATION GIVEN
IN DIFFERENT COMPANIES

BASE S ALAR Y
CON VEYANCE
SPE CIAL ALL OWAN CE S
GRA TUITY
HRA (H OUSE RE NT ALL OWAN CE S)
TRA VE LLI NG ALL OWANCE S
PROVIDENT F UND
MEDICAL C LAIM
BAN K F ACILI TY
BON US
PROVIDI NG C ARS
ST OCK S AND SHAR E
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.
PRESENTED BY:
Shailaja
somashekar
Smita kumari
Smitirupa mishra
Srinivas.D
Subhash mishra