3 Changes in how remuneration is structured

The second change concerns the structure of the remuneration, as well as the group of actors involved in determining this. Whereas remuneration used to comprise a fixed salary (US) with a share of the profits (EU), currently executive compensation generally comprises a fixed salary, a performance-related short-term bonus (based on a short-term incentive plan or ‘STIP’), long-term variable payment (based on a long-term incentive plan or ‘LTIP’) in options, ordinary and/or restricted stock and other emoluments, compiled with the help of remuneration consultants so as to create a package of optimum incentives for the executive. The justification of the current remuneration structure relies to an important degree on a theoretical approach to executive compensation which developed during the 1990s.