1: compensation definition
2: how compensation works
3: compensation vs salary
4: example of compensation
Opening information:
Compensation means the payment of money or some benefits in return for the suffered person from the Top person.
The top people would be owners, government Ministers, employers of some business extra.. Compensation specifically noted in the business of payment in the company
This article contains information about what is compensation, how compensation works in the stock market, and the differences between compensation and wages paid to workers by the company which means salary, and finally jumps to examples of compensation.
1: compensation definition
One of the people named Jack Smith would be the CEO of the restaurant industry in Australia.
He is the one, who started a business 12 years ago. Now it’s a publicly traded Company where Jack owns 20 percent of the company. he is one, well owner-oriented CEO.
He earned a salary of 200,000 dollars per year for his work as a CEO of the restaurant industry. This business has grown consistently by 20 percent a year for the last 10 years.
Moreover, Smith had free company car, meals, and travel expenses for the entire of his career with a business. And also there is if Jack Smith takes any big risk or faces a big challenge to make an industry great growth or profits.
Then the board of directors of the Smith company would offer him 1.5 million dollars minimum or maximum of some total of Industry business option shares for his wonderful work.
Mr. Smith had multiple levels of benefits for his work but most importantly he had more advantage benefits than his salary.
The reason, Smith is a person which passionate about his work and does not expect or do business to make money alone.
So the compensation of the smith would be meals, travel, any other food on business meet risk-taking taking an award of 1.5 million dollars, employee option, annual salary, payment for his insurance extra…
Smith is a person who suffers for the company to make the company successful every day, so he is the one who had high compensation for his work. Now let’s see how the compensation works in the stock market.
2: how compensation works
On the stock market, All the publicly traded companies had one common compensation for the employee. Which is salary as the base thing for everyone.
But the industry which acquires the employee time and works on their life would benefit their company employee in different matters such as providing or paying the premium of their insurance, even arranging a place for parking their car which is included in the compensation.
If the employee of the industry had high risk in his work, they would be compensated with high benefits, and at the same time whether the employee had a low risk and not had a big effort to work for the company, then that employee of the business would be compensated low too.
The salary and any other contract would be fixed and made through term or monthly basic. But when comes to compensation for any employees of the company, it’s quite changeable.
If the business of the employee like the CEO and top managers or directors wouldn’t achieve the expected results of sales or profits based on the agreement of the contract, then compensation would be decreased or not payable to the employee of the business based on the agreement.
Because the compensation is the amount and benefits of service for employees, which would be controlled and determined by the owners of the business.
Now you know how compensation works. Most people are confused the compensation and salary, so now let’s have a look what is the difference between the two of them.
3: compensation vs salary
The difference between compensation and salary is, that compensation is a return of benefits for one purpose. But the salary is the amount which is Paid monthly basic to the works of the certain business.
So salary is part of compensation but not the whole compensation. Because salary doesn’t provide any benefits of paying other related regular expenses like insurance, travel, meals, clothes, accommodation extra…
Salary is a simple payment that comes in as part of compensation.
However, to make you more clear about the compensation let’s dive into one example.
4: example of compensation
Say company A needs a new CEO and a great marketing manager for their company. The company A CEO got a minimum salary of 1.5 million dollars.
And free travel for business meetings, 15,000 dollars on the life insurance payment for the maximum coverage, daily meals, and a free new Volvo car.
On the other hand, if the CEO of company A, would increase the profit or growth of the company without any debt and more issue of shares, the CEO would receive lots of option shares of the company.
Here 1.5 million dollars alone is not compensation, instead expense money on business travels, insurance payments, business meals, and cars including free ownership of the shares came in a compensation pack.
Market rule: #100122
Compensation is reported in the 10k report, which those compensation are determined in the shareholder’s meeting of the company it is disclosed in the annual report of the business which is called as 10k report.
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