Page 244 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

230 The Complete Guide to Executive Compensation

15 days). In addition to the basic six (New Year’s Day, Memorial Day, Fourth of July, Labor
Day, Thanksgiving, and Christmas), common additions include Martin Luther King Day,
President’s Day, Columbus Day, Veteran’s Day, Election Day, and the employee’s birthday. In
addition, holidays called “floaters” may be provided. These are either predetermined by the
company (such as the Friday after Thanksgiving) or left to employee choice. If left to employee
choice, they may be sufficient in number to substitute for other popular holidays and are espe-
cially helpful for individuals wishing to take a religious holiday (e.g., Good Friday or Yom
Kippur). Sometimes holidays are welcome respites; more often, they mean the executive works
at home instead of in the office. As such, holidays are of moderate importance to executives.
Vacations

More important than paid holidays are paid vacations, which usually depend on the length of
service with the company. A typical vacation benefit would allow two weeks after the first year
of work, three weeks after 5 years, four weeks after 10 (or 15) years, five weeks after 20 (or
25) years, and perhaps six weeks after 30 (or 35) years of service. Such a schedule is reason-
able for the executive who has been with the company 10 or more years. However, not many
newly hired executives will be content with two weeks’ vacation, even workaholics who are
unlikely to take the full allowance. Thus, even if the executive is unable to take more than
two weeks’ vacation a year, he or she will want the option. To resolve such situations, some
companies adopt a minimum age as an alternative eligibility criterion for all employees. For
example, regardless of years of service, persons aged 40 to 49 will receive four weeks, 50 to
59 will receive five weeks, and 60 or more will receive six weeks.
It is not unusual for companies to provide liberalized vacations for certain executives,
identified by organization level and/or title. This may be a flat four- or six-week minimum
regardless of service (important to the executive recently hired who is in midcareer), or it may
be a supplement (e.g., two weeks) to the basic policy so that the executive will always have
more vacation than other employees with the same service. In addition, the company may pay
part or all of the executive’s vacation expenses, or the vacation may be combined with a busi-
ness trip. Another perquisite is to allow executives to accumulate any unused portion for one
or more years—thus providing the opportunity to take a mini-sabbatical, to phase in to
retirement, or to soften the blow of termination. (The accounting impact of this policy
should be carefully reviewed.) The perceived value of vacations is probably moderate for the
all-employee portion and somewhat higher if supplemental and carryovers are permitted.

Court Duty

Companies typically supplement the allowance provided for jury or witness duty. In other
words, the company pays the individual as usual but expects the employee to sign over to the
company any pay received. Some companies allow the employee to retain any allowance
provided. Periods of absence extend from a couple of days to months if serving on a complex
case. The longer the absence, the more difficult it is for the executive to stay current with
work and, therefore, the benefit is of low executive importance.

Workers’ Compensation and Disability
Accident or illness is covered by workers’ compensation if work related or disability pay plans
if nonoccupational in nature. Although there have been instances of suits for workers’