Before your new CEO even sets foot in his or her office, some of the most important decisions concerning his CEO tenure will have already been made. One such factor is compensation, which comprises not just salary but benefits, including stock options.
This provision of stock options is an issue that both depends on industry standards and the preference of your business and its board of directors. The Seattle Times recently looked at the relationship between shareholders and the options given to CEOs.
These board members should be involved in the process of determining what works best. The Times story notes that, according to a recent study, the average total payment recorded for a Northwestern CEO was $1.6 million in 2013.
The most "awarded" CEO for this region was T-Mobile's high-profile executive John Legere. Of the more than $29 million he earned in compensation for 2013, just $6.6 million was in cash.
In an interview with Bloomberg, Stanford professor Allan McCall discussed how Coca-Cola's recent changes in compensation can be measured against others in the same field.
The benefits offered by this company (more than 300 million stock options for all of its executives by 2018) might seem excessive to some, but not to those who think about the larger picture, McCall argued. "I think that when you look at the numbers behind the compensation program that they put forward, what you see is something that is more or less in line with what every other company is doing," McCall said.
Executive search consultants know the best way to dispense and structure these benefits, including industry standards, and can advise your organization on how to create an attractive compensation package.
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