Creating Performance-Based Executive Comp Plans

December 8, 2021 Recruiterie

Excellent executives are needed to achieve sustainable success in major commercial operations. Despite the importance of competent executives, many companies lack the human talent they need to thrive because of lackluster executive comp plans that fail to lure in ideal candidates for the job.

Creating executive comp plans that propel performance should be a major priority for any company hoping to reach the big leagues. Here’s how to design an executive compensation package that will attract the industry’s best and brightest to your ranks.

Proper Payment: Executive Compensation Definition

A working executive compensation definition is needed in order to produce truly competitive executive comp plans that will attract the right crop of candidates. When referring to executive compensation, we’re discussing the entirety of the reward –– including salary, stock options, benefits, etc. –– that executives receive in exchange for their leadership and guidance.

A naturally vague term, executive comp plans can materialize in many different ways. Some executives draw incredibly high annual salaries but enjoy few benefits, while others are paid little more than standard workers but are given access to profitable stock opportunities or enticing assets like a company car.

Carefully managing executive compensation is an important part of motivating executives to provide a stellar performance each and every workday. Executives may end up seeking work elsewhere if you only provide them with a meager compensation package. By overcompensating your executives, on the other hand, you run the risk of wasting valuable company resources on an employee who may grow complacent in their lofty position.

The Elements of an Executive Compensation Package

Most executive comp plans feature a combination of the following elements:

  • An enticing salary that’s far above the median annual salary for most workers
  • Stock options, buying an expensive amount of company stock at a fixed, low price
  • Excellent personal benefits, such as personal healthcare and dental coverage
  • Annual incentives or bonuses such as a percentage of quarterly sales
  • Comfortable retirement plans for older executives who may be in their last job
  • A “golden parachute,” or sum of money given when there’s an ownership change

High executive salaries are genuinely correlated with increased company performance. As the Harvard Business Review points out, “[compensation] aligns people’s behavior with the company’s strategy and generates better performance.” Deducing the industry-standard salary for executives and then offering a higher-than-average salary often attracts more candidates who are better qualified than the average joe.

Offering executives the ability to purchase large amounts of valuable company stock at a low, fixed price for a certain amount of time is also a regular feature of most executive comp plans. Other executive compensation package examples will include extensive insurance benefits, including liability coverage if the executive faces personal legal risks in the course of their work.

Finally, many companies propel a stellar executive performance by offering an annual bonus if an executive hits certain milestones throughout the year. Some companies may offer an executive a fixed percentage of the company’s sales as a way of encouraging the executive to take whatever steps necessary to bolster sales across the whole business.

Find the Best Candidates With Recruiterie

Ready to start hiring the best executives around? With the help of the executive search experts at Recruiterie, your company can devise competitive executive comp plans that are sure to leave the competition in the dust. Recruiterie’s team possesses years of valuable experience devising lists of the most qualified and capable executives in all major sectors.

Recruiterie goes the extra mile by working closely with your company to understand its unique needs before the behind-the-scenes search process begins. By keeping your executive search private from the get-go, Recruiterie also guarantees that your company doesn’t accidentally spill its hiring intentions to the whole marketplace during negotiations.

Contact Recruiterie today and begin formulating an executive compensation package that’s guaranteed to deliver stellar results for your business.


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