Over the past two decades, executive compensation has been a topic of discussion, mainly due to perceived excesses that are frequently made prominent in the media. Providing a realistically competitive compensation package requires creating a delicate balance between offering enough to attract, motivate and retain the best people while ensuring shareholders are well-served by the fiscal results created. Directors should explore alternative compensation strategies to appropriately compensate, effectively incent and retain top executives. They should understand the implications of the programs they decide to implement and the impact that executive compensation has on the earnings of the financial institution. For stock companies this is reflected in the return on shareholder value. For mutual organizations this relates to the institutional value that is generated. This is a fiduciary responsibility for the board members. The total compensation package for an executive contains a number of the same elements as for any employee, but can and should be tied more to the institution's performance and long-term objectives.
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