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In this section, we provide an overview of executive compensation other than pension plans and other postretirement benefits, focusing on share-based compensation. First, we briefly discuss common components of executive compensation packages, their objectives, and advantages and disadvantages of share-based compensation.The discussion of share-based compensation then moves to accounting for and reporting of stock grants and stock options. The explanation includes a discussion of fair value accounting, the choice of valuation models, the assumptions used, common disclosures, and important dates in measuring and reporting compensation expense.Employee compensation packages are structured to achieve varied objectives, including satisfying employees’needs for liquidity, retaining employees, and motivating employees. Common components of employee compensation packages are salary, bonuses, non-monetary benefits, and share-based compensation.11 The salary
component provides for the liquidity needs of an employee. Bonuses, generally in the form of cash, motivate and reward employees for short- or long-term performance or goal achievement by linking pay to performance. Nonmonetary benefits, such as medical care, housing, and cars, may be provided to facilitate employees performing their jobs. Salary, bonuses, and non-monetary benefits are short-term employee benefits.