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 BASE SALARY CONVEYANCE SPECIAL ALLOWANCES GRATUITY HRA(HOUSE RENT ALLOWANCES) TRAVELLING ALLOWANCES PROVIDENT FUND MEDICAL CLAIM BANK FACILITY BONUS PROVIDING CARS STOCKS AND SHARE EXECUTIVE COMPENSATION GIVEN IN DIFFERENT COM
