Part I

We start this part of the book with some foundational concepts. First, we cover the basics within the total compensation structure. Second, we discuss the concept of planning and the need to connect total compensation planning with the strategic and operational planning of the organization. Third, we discuss base compensation cost forecasting, and we cover forecasting other total cost elements in specific chapters.

Part I of the book deals with topics that cover the entire total compensation structure. These include base, incentive, sales, international, and equity (share-based) compensation. We also cover topics within the total compensation structure that are commonly known as employee benefits, concentrating mainly on health and retirement plans.

Our focus is to cover the finance and accounting principles within each compensation element. The discussion for each topic stays within the framework of accounting principles and standards as established by the Generally Accepted Accounting Principles (GAAP) and International Accounting Financial Standards (IFRS).

We do not discuss the normal concepts and techniques of designing or developing the elements of the total compensation structure. The normal concepts and techniques are built around the following principles: internal and external equity, motivation theories, ability to pay, and competitive practices. This discussion is left up to other texts. The sole purpose of Part I of this book is to highlight and then discuss in detail the accounting and finance principles that are integral to all the elements of the total compensation structure.