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Executive Compensation, Reverse Discrimination& Legislation

Describe the major components of an executive compensation plan, and discuss the effect reverse discrimination has had on the design of these executive compensation plans. In what way has legislation affected these plans? Use specific examples to support your answer.

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The components of executive compensation are base salary; annual incentive pay tied to short-term performance measures; incentive pay tied to long-term performance like total shareholder return or financial performance; and benefits plan. Short-term incentive compensation is typically is the form of cash, whereas long-term incentives may be a mix of restricted stock or stock options. Benefits may include a Supplemental Executive Retirement Plan, cars, club memberships, severance package, and deferred compensation earnings (Dance, 2011). Typically, the base salary "constitutes 30% of total compensation, the annual incentive another 20%, the benefits about 10% and long term incentives or the wealth creation portion of the compensation about 40% (Deloitte, 2010).
An executive's future earning power is his or her greatest resource. However, should long-term disability strike than the executive will no longer be able to work. Disability lasting three ...

Solution Summary

This detailed solution describes the main components of an executive compensation plan and the effect reverse discrimination has had on these plans. It also describes how legislation has effected these plan. Provides examples and APA formatted references.