It is the role of the chief executive (CEO) and other executives to oversee the company’s strategy and operations. Obviously, these individuals require compensation for their work. It is the responsibility of the compensation (or remuneration) committee of the board of directors to design executive compensation contracts. The “right” amount to pay an executive is the minimum amount it takes to attract and retain a qualified individual.
In addition, the compensation package should be designed so that it motivates the executive to perform in accordance with the company’s objectives and risk tolerance. Executive compensation packages generally include a mix of short-term incentives (including salary, annual bonus, benefits, and perquisites) and long-term incentives (including stock options and restricted shares). The package may also include guarantees such as a severance agreement, change in control provision (if the company is bought out), and pension.
So the question becomes- what analysis have you done to determine if these benefits are right for your company?
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