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Compensation and Benefits

In: Business and Management

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The six forms of deferred (stock) compensation include: Incentive stock options, Non-statutory stock options, Restricted stock, Phantom stock plans, Discount stock options, and Stock appreciation rights. * Incentive stock options entitle executives to purchase their companies’ stock in the future at a predetermined price. * Compared to incentive stock options, non-statutory stock options do not qualify for favorable tax treatment. Executives’ pay income taxes on the difference between the discounted price and the stock’s fair market value at the time of the stock grant. * Restricted Stock means that executives do not have any ownership control over the disposition of the stock for a predetermined period, often 5–10 years. Executives must sell the stock back to the company for exactly the same discounted price they had at the time of purchase if they terminate their employment before the end of the designated restriction period. * A phantom stock plan is a compensation arrangement whereby boards of directors promise to pay a bonus in the form of the equivalent of either the value of company shares or the increase in that value over a period of time. * Discount stock option plans are similar to non-statutory stock option plans with one exception. Companies grant stock options at rates far below the stock’s fair market value on the date the option is granted. * Stock appreciation rights provide executives income at the end of a designated period, much like restricted stock options; however, executives never have to exercise their stock rights to receive income.
Unions generally do not support companies’ use of contingent workers and flexible work schedules. Most union leaders believe that alternative work arrangements threaten members’ job security and are prone to unfair and inequitable treatment. The most common concerns include: * Employers exploit contingent workers by paying them lower wages and benefits than core employees. * Employers’ efforts to get cheap labor will lead to a poorly trained and less skilled workforce that will hamper competitiveness. * Part-time employees are difficult to organize because their interests are centered on activities outside the workplace. Part-time workers are therefore probably not good union members. * Part-time employment erodes labor standards: Part-time workers are often denied fringe benefits, job security, and promotion opportunities. Increasing part-time employment would promote inequitable treatment.
These are just a few examples of why unions do not support contingent workers. Unions’ positions against contingent employment should change due to this practice undermining the efforts to secure high wages and job security for members.
Human resources professionals can design person-focused pay plans to reward employees for gaining new horizontal skills, vertical skills, or a greater depth of knowledge or skills.
Horizontal skills are similar skills or knowledge. An example would be clerical employees of a retail store have been trained to perform several kinds of record-keeping tasks. They may maintain employee attendance records, schedule salespeople’s work shifts, and monitor the use of office supplies reordering. Each is focused on different aspects of a store’s operations. All three of these tasks are based on employees’ fundamental knowledge of record keeping.
Vertical skills are those skills traditionally considered supervisory. These types of supervisory skills are often emphasized in person-focused pay plans designed for self-managed work teams because team members often need to learn how to manage one another.
Depth of skills refers to the level of specialization or expertise an employee brings to a particular job. Some person-focused pay plans reward employees for increasing their depth of skills or knowledge.

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