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Compensation Policies & Practice Survey Highlight Report

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Talent, Rewards & Performance Intense focus goes into executive total compensation planning each year, but organizations typically place the bulk of their attention on traditional components of pay, such as base salary levels, short-term incentive targets and pay curves, as well as their overall long-term incentive plan designs. Meanwhile, as the executive compensation professional, you're also faced with making sure that you have competitive executive perquisites to help attract and retain the top leadership talent for the organization. The topic of perquisites can be like the electrified third rail of executive compensation. Even though the amount of money companies spend on perquisites is the smallest piece to the total compensation pie, perquisites can trip you up. On one hand, executives point to a 'need' to having perquisites as an essential part of their employment relationship. On the other hand, the investment community (i.e., proxy advisory firms and large institutional investors) see company expenditures on perquisites as a potential misuse of their invested capital. They argue that executives are already highly paid individuals and can afford to spend their own money on these niceties. And thanks to the 2006 enhanced disclosure requirements required by the Securities and Exchange Commission (SEC), companies perceived as being too loose with executive perquisites risk sparking poor advisory firm evaluations, Say-on-Pay results, additional shareholder proposals, or contentious debates at shareholder meetings. Perquisites: e ird Rail of Executive Compensation Perks are Necessary, but Highly Scrutinized

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