Essay on The three types of Compensation and Benefits

1180 Words May 4th, 2014 5 Pages
The three types of Compensation and Benefits analyzed through this research are Shared Base Compensation dealing with stock option and restricted stock, Regular Base Compensation and Pension Plans.

Laura Santos
ACG4111/ Intermediate Accounting II
February 2014

Compensation and Benefits comes in many different forms. The major goal for compensation and benefits is to reward employees for services provided by an individual for the benefit of the organization. It’s a set of programs, aiming to achieve and attract capable workers to a particular business. Compensation and benefits also helps motivate employees towards superior performance and retaining these services for a long period of time. There is
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The benefit and advantage to management and employees is that they can share in the growth of the company’s stock prices, if structured properly these stock options can support shareholder and employees interest without touching the company’s cash reserve. Most employees working for lower salaries intend on cashing in later when stock prices increase. Restricted stock is less dilutive than stock options but provide the same advantage for stock appreciation. Stock options have very little risk for employees but can have long term consequences for shareholders if risk taking behavior influence share prices, which can be a disadvantage.
Next we will observe regular base compensation, though it sounds quite like share base compensation they are different. Share based compensation can be considered an option regular base is a guarantee. Regular base compensation is in regard to wages or salaries as payment to an employee in return for their contribution to the organization. Organizations usually associate compensation with a job description and monies is earned per year according to the roles, experiences and longevity. When it comes to accounting requirements and disclosures there is not too many details or procedures to follow. This type of compensation is totally an advantage to an employee; unless you were to lose your job then this would be considered a disadvantage. Lastly, we will observe the Pension Plan and its

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