Beyond Salary—Executive Compensation Past and Present

Abstract

One obvious indication that managers are interested in this subject is the number of annual surveys and current articles in business and professional publications. This interest has been recognized mainly in the period since World War II, when executive mobility really began in earnest. Some of the writings on personnel management give clues to compensation practice at earlier dates, but the need to know the “going rate” for an executive in order to lure him away (or keep him) spurred detailed surveys of compensation and systematic review of practices. Tax policies, governmental regulations, and pressures from organized labor’s demands all have had an effect. Over the last two decades, tax-conscious compensation practices have become the rule for top executives. These will be just as imporant to the middle managers and professionals as their level of compensation is boosted by inflation and wage increases granted to production employees. New tools and techniques are evolving to make compensation more than just a salary to be divided between the manager and the tax collector. This paper reviews the evolution of executive compensation practices since the turn of the century, describes many of the practices in current use, and indicates which of these practices will be more important in the near future.