Executive Remuneration can be divided into four main categories:
Pay Package Design: Typically divided into the following distinct remuneration components:
- short-term incentives
- long-term incentives
- benefits, perquisites and severance/change-in-control agreements.
Long-term Remuneration: This makes up the bulk of most executive pay packages and is typically based on shares or share appreciation rights.
Performance-Contingent Pay: Executive pay is generally dependent on a company achieving pre-decided criteria – either specific financial results and/or strategic objectives.
Vesting Schedules: Even after financial or strategic criteria for an award is met, full ownership of the long-term award is often based on the executive meeting certain performance conditions.