CHAPTER 16
EXECUTIVE AND INTERNATIONAL COMPENSATION
The compensation offered to USA executives has made them the envy of the world. Their
compensation packages begin with a base pay that frequently starts at greater than a million dollars a year.
From the million dollar base, short-term stock acquisition plans can quickly increase the value of their
The compensation package for executives includes:
1. Base pay that may range from 20 to 200 times that of the lowest-paid employees.
2. Short-term bonuses that equal and, at times, are double or triple base pay.
Special compensation programs must be developed for USA citizens who are sent to foreign
locations to provide needed knowledge, skills, and leadership. Compensation for employees in foreign
worksites must first relate to the compensation provided to employees performing similar jobs in the USA.
Then, the special compensation components provided to people working at foreign locations must be
considered. Compensation programs for employees at foreign worksites include components that support
KEY CONCEPTS
1. Stock acquisition opportunities have made USA business executives extremely wealthy.
3. Contracts guaranteeing certain levels of annual income for extended periods of time to
individuals accepting executive positions in USA organizations.
5. The important role played by stock options in an executive compensation program.
7. The concept of reverse discrimination in executive compensation.
SIGNIFICANT POINTS OF INTEREST
1. The compensation received by executives of USA businesses receives world-wide attention.
2. There are some who believe the highly-compensated US executives earn every penny of the
3. Major parts of an executive compensation package are short- and long-term stock acquisition
4. With the advancement of the US stock market during the last half of the 1990s, equity-based
5. Recognizing the importance of tax legislation and its impact on the income and estates of
6. A major part of an executive compensation package provides the individual with the
opportunity to acquire company stock at an advantageous price.
7. Stock acquisition programs are directly affected by federal tax legislation. The features of
8. Stock acquisition plans can be qualified or nonqualified. Qualified stock acquisition plans
grant the organization and its stock recipients certain rights relative to tax obligations.