Executive compensation plans have the potential to motivate executives and focus their energies on behavior that directly supports or fulfills organizational goals. Executive compensation is a governance mechanism that seeks to align the interest of managers and other top executives through salaries, bonuses, and long-term incentive compensation. Unfortunately, executive compensation can be out of control and out of balance.
Compensation paid to the top executives is a sensitive area. Executive compensation remains a challenging issue for many corporate boards. For conflict-free, most corporations hire independent compensation consultants to study the recommend to the board the salaries and bonuses for top executives. The use of a compensation consultant would be helpful in developing a reasonable compensation program. Large companies tend to use more than one outside consultant, to seek second opinions and enhance the objectivity of the consultative process.
It is important to hire experienced compensation consultants from reputable firms. For more information about executive compensation you can go to http://www.board-advisory.com