Executive compensation

Executive compensation

Executive Compensation is how top executives of business corporations are paid. Salary is taxable to an individual at a high individual rate. If part of that income can be converted to capital gain, for example by granting stock options to executives, a more advantageous tax treatment may be obtained.

In a typical modern US coorperation, the CEO and other top executives are paid with a mixture of cash and shares of the company (which could immediately be sold and redeemed for its value in cash). For example a highly paid CEO would get 1 million cash, and 10 million in shares of the company.

Other components of an executive compensation package may include such perks as generous retirement plans, a chauffered limosine, an executive jet, interest free loans for the purchase of housing, etc.