Executive Compensation is certainly a topic for hot and rather emotional discussion as well as news headlines. While many people believe that shareholders interests suffer greatly because of the unreasonably high salaries of top managers, others stick to the point that chief executives are really earning their pay. Still others think the controversy itself often goes beyond the interests of the shareholders.
What is executive compensation?
Executive compensation (also referred to as director or executive remuneration) is a payment method applied to chief executive officers and top managers of big companies and corporations. The basic salary, long-term and short-term incentives such as company shares and bonuses, and other types of benefits comprise executive remuneration. Executive remuneration has seen a dramatic increase recently far beyond the average growth rates of workers wages.
Many people see the major reason for the rapid rise of CEO’s pay in the fact that basically it is the board of directors who establish their own salary. Being the controlling body of the company, the board of directors manages all the resources and spending including the employees pay.
Types of executive compensation
Typically chief executives are paid a base salary complemented by short-term and/or long-term incentives. This type of executive remuneration is called Total Cash Compensation (TCC).
Bonuses and short term incentives are generally performance driven and are calculated according to some formula. For instance, the revenue growth can be taken as a basic factor that determines the amount of short-term incentives for a Sales Director. CEOs can also be offered company shares as part of their remuneration, which is considered to be a long-term incentive in case the vesting period in question is more than one year. That means that the executive won’t be able to sell or transfer the shares before the vesting period expires. Executive remuneration may also include other types of employee benefits such as health insurance, extremely favorable loan terms, a personal car or jet, retirement plan, etc.
Legal issues
According to federal law public companies are required to provide a transparent and clear disclosure about the remuneration paid to chief executive, financial and other high-ranking officers. The information on executive remuneration methods and policies of a company can be found in a number of documents that it files with the U.S. Securities and Exchange Commission, including the annual proxy statement or securities registration statement. However, the amount of compensation paid to the chief executives is a purely business decision taken by the company which is beyond the Commission’s jurisdiction. The purpose of the disclosure is to inform the shareholders on the investment and other financial decisions taken by the company. The part of executive compensation paid in cash is taxable at an individual rate, and long-term incentives may be subject to a more favorable tax treatment.
Executive Compensation Lawyers in NYC
Executive Compensation Lawyers will help make sure that your executive compensation is properly negotiated and paid. Contact Borrelli & Associates, P.L.L.C. if you believe your executive compensation is in jeopardy. Our lawyers are experts and will do everything possible to guarantee your compensation package is executed properly.
If you are an executive director or a chief executive officer (most commonly known as a CEO), you are entitled to executive compensation, including, but not limited to, salary, an incentive or incentives, and other forms of compensation. We work hard to protect the rights of executive directors and chief executive officers.
Stock Options, Bonuses, Paid Vacations & More
When you established yourself as an executive director or a chief executive officer of your New York company, your value to your company increased, affording you a hefty executive compensation package, and our executive compensation lawyers will help you secure it.
Borrelli & Associates understands how valuable your executive compensation is to you, and offers help and legal representation in all of the largest regions of New York, including Manhattan, New York City, Nassau County, Suffolk County, Great Neck, Brooklyn, the Bronx, Queens, and Staten Island. Enlist the help of a highly skilled and experienced executive compensation lawyer and your salary, shares, bonuses, incentive package, and other benefits will never be compromised again.
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