At the top levels of an organization, an executive's personal qualifications and performance are often critical to the success or failure of key programs, and executives should be paid accordingly.
Pay is also a key element in recruiting and retaining executives.
SES pay was designed to allow agencies to factor performance into their pay-setting decisions and consider other elements such as expertise brought to the position, qualifications required, scarcity of qualified personnel, pay for comparable private sector personnel, and geographic location, as well as the duties and responsibilities of the executive's position and its organizational location. The agency head sets basic pay for new SES appointees at any one of the six rates. An agency can adjust the basic pay rate once in any 12-month period. Locality pay entitlement is based on the official duty station. Locality pay is included in calculations for retirement, life insurance, thrift savings, severance pay, advances in pay upon appointment, and lump-sum annual leave payments upon separation.