What is Executive Compensation?

Whether you're a beginner or an expert, you will find this Glossary useful.

Executive compensation, also known as executive pay, refers to remuneration packages specifically designed for business leaders, senior management and executive-level employees of a company

what-is-executive-compensation

Executive compensation definition

Executive compensation, also known as executive pay, refers to remuneration packages specifically designed for business leaders, senior management and executive-level employees of a company.

Executive compensation includes benefits such as salaries, perks, incentives, insurances etc.

Importance of executive compensation

Senior management and executive-level employees play a crucial role in the company as they're the ones making the strategies, taking importance decisions etc. In order to keep them motivated and satisfied it's important to set the right benefits package.

This type of compensation is negotiable between the employer and potential executive and can defy the organizational norms on compensation to regular employees.

Components of executive compensation

1. Salary

2. Short Term Incentives (STI)

3. Long Term Incentives (LTI)

4. Guaranteed Severance Package

5. Perquisites – like club memberships, private planes

6. Insurance – health insurance for self and dependents


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