What are the Most Effective Executive Compensation Strategies for Levels not Eligible for Long Term Incentive?
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Calder, Jane; Shah-Hosseini, Suzanne
The trend toward incentive-based, long-term compensation has increasingly strengthened as companies seek to align shareholder, management, and executive interests, especially in light of the financial crisis of 2008. Privately held companies face a unique challenge because they are not in a position to easily offer stock options as a means of a long-term incentive plan; although possible, it is both cumbersome and dilutes the owners’ control of the company. We have identified two alternative means of providing incentives to managers and executives: deferred compensation and the use of perquisites. In addition, we provide a closer at look at the impact and efficacy of the trend toward incentive-based pay on employee and business performance.
human resources; executive compensation; work incentives; compensation strategies
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