Compensating Executives Chapter # 13. What is executive status? IRS recognizes two groups – Highly compensated Very responsible position 5% owner sometime.

Slides:



Advertisements
Similar presentations
Chapter 21 Rewarding Performance Cost Accounting Traditions and Innovations Barfield, Raiborn, Kinney.
Advertisements

1.
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 0 Chapter 1 Introduction to Financial Management.
Lecture 30 Executive Benefits and Nonqualified Deferred Compensation Nonqualified Deferred Compensation Stock for Executives –Restricted Stock –Stock Options.
Reward - Prize, Recompense, Return, Incentive.,. Process.
Variable Pay and Executive Compensation
Introduction Organizations have a relatively large degree of discretion in deciding how to pay. Each employee’s pay is based upon individual performance,
INCENTIVES & FRINGE BENEFITS. Variable Pay Or Pay For Performance Systems Here the pay is linked to individual, group or organisational performance. Employees.
Designing Compensation and Benefit Packages
Stock Option Backdating and Practices Conference Presented by: Joseph T. Gulant, Esquire September 21, 2006.
Key Concepts and Skills
Stockholder Rights and Corporate Governance Stockholders Corporate Governance Executive Compensation: A Special Issue Shareholder Activism Government.
Slide Number 1 out of 14 Executive Pay: The Plan n Video n The What + When + Why of Executive Pay n Components of Executive Pay n The Take Home Message.
© 2004 The McGraw-Hill Companies, Inc. McGraw-Hill/Irwin Chapter 18 Employee Benefit Plans.
Employee Stock Plans Kevin Ball Bryce Peterson Adam Wright.
Emerging Issues in Management (Mgmt 440) Professor Charles H. Smith Corporate Governance (Chapter 18) Summer 2009.
Chapter 16 Real Estate and High-Risk Investments.
Compensation of Special Groups
Chapter Objectives Be able to: n Explain what factors to consider when evaluating different compensation packages. n Identify and explain the different.
Chapter 6 Pay, Benefits, and Working Conditions
ESOP/Stock Bonus Plan Chapter 18 Employee Benefit & Retirement Planning Copyright 2009, The National Underwriter Company A stock bonus plan is defined.
1 Retirement Planning and Employee Benefits for Financial Planners Chapter 6: Stock Bonus Plans and Employee Stock Ownership Plans.
UNIT 5 MT203 Human Resource Management Seminar
Chapter 1 Introduction to Financial Management. Key Concepts and Skills Know the basic types of financial management decisions and the role of the financial.
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 0 Chapter 1 Introduction to Financial Management.
Copyright © 2008 by Nelson, a division of Thomson Canada Limited. 11–1 Part 4: Compensating Human Resources Chapter 11: Variable Pay and Executive Compensation.
Recognizing Employee Contributions with Pay
Compensation of Special Groups
Chapter Thirteen Compensating Executives. Who are executives? Executive compensation plans provide favorable tax treatment. IRS recognizes employees who.
Chapter 38 Employee Benefit & Retirement Planning Restricted Stock Plan Copyright 2009, The National Underwriter Company1 An arrangement to compensate.
Pay For Performance and Financial Incentives
1 Review: Restricted property, Nonqualified stock options, Incentive options. Howard Godfrey, Ph.D., CPA UNC Charlotte Copyright © 2008, Dr. Howard Godfrey.
Chapter 2 Executive Incentives.
Advances in Human Resource Development and Management Course code: MGT 712 Lecture 14.
P. 1 SESSION 6 - Long-Term Incentives. p. 2 SESSION 6 - Long-Term Incentives Reward System Job Analysis Jpb Evaluation Managing Base Pay Managing Base.
Pay, Benefits, and Working Conditions
FIN 413 Corporate Financial Policy Clifford W. Smith, Jr. Spring 2007 Presentation 3 * Covers readings on course outline through Brickley/Smith/Zimmerman,
Human Resource Management Lecture 17 MGT 350. Last Lecture Pay Types of Reward Plans Intrinsic versus Extrinsic Rewards Intrinsic Financial versus Nonfinancial.
Strategy for Human Resource Management Lecture 23 HRM 765.
Jayendra Rimal 1. Introduction 2 In the wake of financial scandals involving major companies like Enron and WorldCom (especially their inflated accounting)
Life Insurance In Qualified Plans Chapter 32 Tools & Techniques of Life Insurance Planning  What is it?  Life insurance is purchased and owned.
MBAO Executive Compensation Executive Salaries: Tax Issues Highly Paid Employees (IRS Definition): One or more of the following satisfy the definition:
Stock Options Chapter 35 Employee Benefit & Retirement Planning Copyright 2011, The National Underwriter Company1 A formal, written offer to sell stock.
Employee Benefits Deferred compensation: pay me later  Hopefully, lower tax rate when funds are received  Only $1 million of compensation per person.
Chapter 11. – A savings account pays interest, has no maturity date, and allows funds to be withdrawn at any time without penalty.savings account –
EMPLOYEE BENEFIT PACKAGE. HOW DO YOU DECIDE When you are presented with more than one job offer, how do you make your final decision? Consider this information.
COMPENSATION SYSTEM. IPMI-HRM-Krishnan Rajendran, 2010 What is Compensation? Employee compensation is the process of paying and rewarding people for the.
Module 12 Compensation and Fringe Benefits. Module Topics n Employer-Employee Motivations n Forms of Compensation n Property Transfers n Fringe Benefits.
Executive Bonus A plan to help recruit, retain and reward key employees GenAmerica Financial 700 Market Street St. Louis, MO
A Human Resource Management Approach
McGraw-Hill/Irwin Copyright (c) 2002 by the McGraw-Hill Companies Inc Principles of Taxation: Advanced Strategies Chapter 3 Chapter 3 Employee Compensation.
McGraw-Hill© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
8-1 Compensation and Tax Planning  Recall the three types of tax planning:  Converting income from one type to another  Shifting income from one time.
McGraw-Hill/Irwin Copyright (c) 2003 by the McGraw-Hill Companies Inc Principles of Taxation: Advanced Strategies Chapter 3 Employee Compensation Strategies.
C HAPTER 12: C OMPENSATING E XECUTIVES MGT 4543: Compensation Management.
STRATEGIC COMPENSATION A Human Resource Management Approach Chapter 12: Compensating Executives Copyright © 2015 Pearson Education, Inc.12-1.
Personal Finance Employee Pay & Benefits Chapter Six Notes.
Show Me the Money! Re-numeration and Pay Incentive Packages for Employees.
Compensation of Special Groups
EMPLOYEE BENEFIT PACKAGE. HOW DO YOU DECIDE When you are presented with more than one job offer, how do you make your final decision? Consider this information.
Chapter Objectives Be able to:
Compensation of Special Groups
Pay, Benefits, and Incentives
Chapter 11: Compensating Executives
11-3.
Money Management Chapter Six Notes Employee Pay and Benefits
Compensating Executives
Long-term Incentive Plans
Employee Benefit Package
Presentation transcript:

Compensating Executives Chapter # 13

What is executive status? IRS recognizes two groups – Highly compensated Very responsible position 5% owner sometime during year Paid $100,000 or more yearly – Key Employee $145,000 up Responsible role

Long term and short term Pay

CEO’s sell their services

CEOs Can hired and use their own compensation consultants. Conflict of interest Fired employees last year (2007) Who pays? stockholders

Types of Executive Pay Packages Main Components Annual pay Stock Options Golden Parachutes Perquisites and Enhanced Benefits Bonuses

Base (annual) Pay Broader range No formal pay structure IRS lets firm deduct CEO pay as tax write off up top $1,000,000. Base pay is smallest part of total package

Bonuses Single pay for performance Discretionary Depend upon profits Future opportunities Performance contingent bonuses Predetermined allocation bonuses Target plan bonus No bonus if profits fall below a certain amount

Short term incentives

Deferred Core Compensations Company stock Pay given at future date Idea is to create sense of ownership Align goals of exec to goals of firm Tax advantage for CEO Deferred until retirement

Types of incentives Stock options Have to pay cap gains in future Non Statutory stock options – Tax paid upon receipt Restricted Stocks – CEO has to return stock when leaving – At original price. Idea is to pocket gains

Types continued Phantom, stocks – Hypothetical stocks. Discount stock option – Stock given at lower than market value Stock appreciation rights – Income is taken at end of a certain period of time

Golden Parachutes IRS considers It business Expense YOU’RE FIRED

Platinum parachutes Your’re outa here !!!!! Before contract over Severance Continued benefits Stocks Example Bancorp… mil cash stocks + free health care + 40,000 month consulting

Tighter Regulations of Deferred Plans EX: Enron Exec withdrew cash out firm before bankrupt Sabanes Oxley Act – Financial disclosure or penalty to execs – Full audits

Other Perks Extra insurance Corporate jets Supplemental retirement plans Country club memberships Vacation homes Tickets

How is Executive pay Set? Individuals Groups Consultants Pay committees Boards of Directors

Theories about exec pay Agency Theory Tournament Theory Social Comparison Theory

Security Exchange Commission Disclosure Look #336 Full disclosure of four top level execs

Feedback: Privacy Policy Feedback
Do Not Sell My Personal Information
About project: SlidePlayer Terms of Service

© 2024 SlidePlayer.com Inc. All rights reserved.