Strategic Compensation: A Human Resource Management Approach, 9/e

Defining Executive Status

1. 2 Define executive status.

It is important to define executive status because it is not an arbitrary designation. In fact, the Internal Revenue Code (IRC), which is the tax code of the United States, provides criteria to guide us in the definition of executives as these are key employees and highly compensated employees.

Who Are Executives?

Virtually all the components of executive compensation plans provide favorable tax treatment for both the executive and the company. Who are executives? From a tax regulation perspective, the IRC recognizes two groups of employees who play a major role in a company’s policy decisions: highly compensated employees and key employees. The IRC uses “key employees” to determine the necessity ...