Managerial compensation

By Harshini sandadi

Compensation is the remuneration received by an employee in return for his/her contribution to the organization.

Salary
bonus Long term incentive

perquisites

Salary determined through job evaluation and serves as basis for other benefits
Manager is paid for his capabilities and for job he performs Salary makes up of about 40 to 60 % of top managers annual compensation but it is not significant , as it is subject to deduction at source

This type of incentive is annual and based on company performance or profit sharing
In some system annual bonus is tied to share return on investment Other bonus plans are based on subjective judgments of board of directors and CEOs

Stock options are long term benefits offered to managers. Companies allow managers to purchase their shares at fixed price

Special benefits for executives usually non-cash items:

Health club membership Country club membership First class airfare Entertainment Automobile

Organizations are increasingly linking their variable pay plans to individuals, teams and organizational performance. Companies have leveraged the variable pay to aggressively position their top performer at the top end of the market
Companies are experimenting with cost to company "concept , with focus on high compensation structure

TCS adopted EVA aimed at creating economic value by concentrating on long term continuous improvement This model measured operating and financial performance of the organization.
Component of fixed and variable pay were determined Fixed Pay- wages, pension. Variable Pay- bonus, profit sharing and stock options