Page 239 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)
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Chapter 6




                            Employee Benefits


                                and Perquisites











           INTRODUCTION
                       his chapter combines two compensation elements—employee benefits and
            T          perquisites—since executives participate in both. Perquisites (perks for short)
                       begin where employee benefits leave off and for that reason the two are
                       combined in this chapter.

           Importance by Type of Company

           Like the salary element described in Chapter 4, the importance of employee benefits and
           perquisites in the compensation package depends on whether the company is nonprofit or
           for-profit, publicly held or privately held. This is illustrated in Table 6-1 and Table 6-2. The
           relatively higher importance of employee benefits and perquisites for not-for-profit compa-
           nies is caused by restrictions on use of incentive pay. Thus, employee benefits and perquisites
           have to pick up some of the slack.

           Eligibility
           Employee benefit eligibility typically applies to all full-time and part-time employees. However,
           eligibility for perquisites is very selective. Typically, it is the most exclusive of the five pay
           elements and applies only to executives as defined in Chapter 1. Key position, salary, job grade,
           title, reporting relationship, or some combination of these can define an “executive.”

           Employee Benefits vs. Perquisites
           The employee benefits element deals with providing time off with pay, service programs, health
           care, survivor protection, and retirement coverage to all employees in the organization. The



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