What Is the Definition of Executive Compensation?

Executive compensation, also called executive pay, refers to remuneration packages specifically created for members of executive management teams in order to motivate them to work in the best interest of shareholders.

What Are the Types of Executive Compensation?

There are different forms of executive compensation such as performance incentives. The most common types of compensation includes:

  • Money (salary, bonuses);
  • Option grants;
  • Long-term incentives (LTI);
  • Deferred compensation;
  • Retirement packages;
  • Additional benefits such as enhanced insurance;
  • Perquisites (private jet, travel reimbursement, meals, etc.).

Who Qualifies for Executive Compensation?

Executive positions such as chief executive officer (CEO), chief financial officer (CFO), chief technology officer (CTO), directors, and high-level managers may qualify for executive compensation depending on the policy of the company.

What Is the Purpose of Executive Compensation Programs?

The goal of executive compensation programs is to incentivize senior executives to dedicate themselves fully to improving the performance of the company to the benefit of shareholders.

Executive compensation is a method of motivation that aims to sustain growth and overall success.

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