Executive perquisites, commonly known as “perks,” are non-salary benefits provided to executives and high-level employees across various organizations. These perquisites are part of a comprehensive compensation package and are designed to attract, retain, and motivate top talent. While standard employee benefits may include health insurance and retirement plans, executive perquisites often encompass more exclusive and valuable offerings.
Types of Executive Perquisites
Financial Perquisites
Executive perks often include substantial financial benefits that go beyond the basics.
- Company Car and Chauffeur Services: Providing luxury vehicles and drivers.
- Stock Options and Grants: Equity stakes in the company to align executive interests with those of shareholders.
- Bonuses and Incentives: Performance-related financial rewards.
Lifestyle Perquisites
Lifestyle perks improve the personal lives of executives outside of work.
- Private Jets and Travel Allowances: Access to private air travel and travel-related expenses.
- Club Memberships: Memberships to exclusive gyms, golf clubs, and other social clubs.
- Housing Allowances: Assistance with housing costs, sometimes including luxury accommodations.
Professional Perquisites
Professional perks enhance the executive’s career and professional development.
- Conference and Education: Access to high-level conferences and continuing education opportunities.
- Legal and Financial Advisory Services: Personalized legal and financial guidance.
- Executive Health Programs: Comprehensive health and wellness programs, including preventive healthcare.
Historical Context
Executive perquisites have been a staple of corporate America since the early 20th century. Originally seen as a symbol of status and recognition, these perks have evolved significantly over the decades. In the past, simple amenities such as reserved parking spaces were considered significant. Today’s executive perquisites, however, include complex financial instruments like stock options and often extend into the personal lives of executives.
Applicability
Executive perquisites are most commonly found in large corporations, where they serve several vital purposes:
- Attraction: High-value perks attract top talent in a competitive job market.
- Retention: Once hired, these benefits help maintain executive loyalty and reduce turnover.
- Motivation: Performance-related perks like bonuses and stock options incentivize executives to align their goals with company success.
Comparisons
Executive Perquisites vs. Standard Employee Benefits
- Scope and Value: Executive perquisites are usually more extensive and valuable compared to standard employee benefits.
- Customization: Often tailored specifically to the needs and preferences of the executive.
Executive Perquisites vs. Executive Compensation
- Non-Monetary: While salaries and bonuses are direct financial compensations, perquisites often include non-monetary and extra-financial benefits.
- Indirect Costs: Perquisites can sometimes be more costly and complex to administer than direct compensation.
Related Terms with Definitions
- Deferred Compensation: A portion of an executive’s earnings that is set aside to be paid out at a later date.
- Golden Parachute: A large financial compensation package provided to an executive if they lose their job due to a merger or takeover.
- Stock Options: Financial derivatives that give executives the right, but not the obligation, to buy shares at a set price within a specific timeframe.
FAQs
What are the most common executive perquisites?
Are executive perquisites taxable?
Why do companies offer executive perquisites?
References
- Kaplan, Steven N., and Joshua Rauh. “Wall Street and Main Street: What Contributes to the Rise in the Highest Incomes?” The Review of Financial Studies 23, no. 3 (2010): 1004-1050.
- Bebchuk, Lucian A., and Jesse M. Fried. “Executive Compensation as an Agency Problem.” Journal of Economic Perspectives 17, no. 3 (2003): 71-92.
Summary
Executive perquisites, or perks, are significant components of compensation packages for high-level employees. These benefits serve to attract top talent, retain executives, and motivate them to achieve company goals. Spanning from financial incentives to lifestyle benefits, these perquisites reflect the value companies place on their executives’ contributions. Understanding the history, types, and implications of executive perquisites can provide deeper insights into corporate governance and compensation strategies.
