Compensation packages, particularly for executives, are made up of five elements--salary, employee benefits, short-term incentives, long-term incentives, and perquisites. Of these, perquisites are probably the most misunderstood, according to author Bruce Ellig, vice-president of Corporate Compensation and Benefits for Pfizer Inc. The value of perquisites, or "perks," is their degree of exclusivity--that is, their worth as status symbols or "membership benefits" for those employees at or above a certain level in the company's hierarchy. And their value is enhanced when they (as some do) qualify for favorable tax treatment. True perks fall into six categories--time off with pay, executive services, nonperformance awards, health-care, survivor protection, and retirement coverage. Within these categories, perks take many forms. Time off with pay, for example, might include employment contracts, liberalized vacations, the privilege of working at home, disability benefits, sabbaticals, severance pay, or outplacement assistance. The use of perks varies among companies, but is more popular among small companies.