The definitions of the key concepts of this study are presented in this chapter. Some of these
concepts are based on previous literature. Other relevant concepts are defined within the text.
Cash compensation: The combination of fixed basic pay or annual salary and cash incentives,
which is typically performance-based for executives. Cash compensation levels are usually
aligned with market levels.
Total direct compensation: In addition to cash compensation, total direct compensation
includes the opportunity to acquire company equity, such as shares and options. “Base salary
is often less than half of the direct compensation for executives” (Risher, 2009: 9). Employees
receive direct compensation in return for the services they provide to the organization. They
are given at a regular interval at a definite time.
Indirect compensation: Everything from the legally required public protection programs, such
as social security to health insurance, employment security, retirement programs, and
allowances such as a company car or housing.
Total compensation: In addition to direct compensation, this includes indirect compensation
with benefits and the value of the prerequisites of higher-level executives.