Understanding Executive Compensation: What Are the Latest Trends and Drivers?

Can anyone help me with an article or write-up on trends and drivers of executive compensation?

Pooja

Dear Pooja Mehra, The picture I have of Executive Compensation is that in a regular business environment, and not a "one-man show," it is the duty of the Human Resources functionary to propose to Management new trends in compensation administration as it relates to your industry and the economy at large. Most times, it has to be a global survey to cover all employees, while leaving the decision for the Executive Management to make.

Meanwhile, go ahead and conduct your survey among your industry colleagues and propose to your Management.

Cheers and have a nice one always.

Regards, Afolabi Ajayi Nigeria

Hi!

Industry-based executive compensation

Executive compensation tends to be more industry-based than anything else. Global surveys are irrelevant, although they can be a good guide.

We have seen executive compensation rates from different companies and industries. The differences among the rates, even between expats and local executives, are significantly wide. There are CEO median rates in certain industries that approximate only the supervisory rates in other industries. Even the gaps in compensation rates of CEOs in the Fortune 500 are quite significant.

Designing executive compensation

We have designed executive compensation for companies. What one needs to do is not just to create rates for the executive level. We have to make sure that the executive salary structure has a logical and reasonable impact on the company's corporate-wide salary structure and philosophy, especially on the managerial and rank-and-file employees, and the total current compensation budget approved by its board.

I like to compare executive compensation to the management of the salaries of professional basketball players (e.g., NBA), where the size of one superstar player's pay has a tremendous impact on the prospective pay of the other players on the team.

Best wishes.

Ed Llarena, Jr.

Managing Partner

Emilla Consulting

Manila, Philippines