When it comes to compensating expatriates, I find this subject to be very interesting. Mainly because if the person who is working in a different country is excited to be there, it provides a win-win situation for both parties. Companies are always looking to expand their markets and understand their customers better, and having a diverse workforce that has different cultural experience is always a good thing. For the employee, it provides a chance to work in a different country, see other parts of the world and experience their culture, and have something that provides them with income and a good reference to have on their resume.
I think that when it comes to expat compensation, a few things should be considered. For one, relocation costs should be something that the company is willing to pay for. Often people who are willing to work in other countries are young, and young people typically do not have that much money. Having a company that understands this and is willing to cover the costs of travel and relocation is a big plus. Another thing to consider is if there are other people from your country or non-natives that will be able to offer support while the employee gets situated. Traveling can be a major lifestyle change, and having someone to aid in the transition is something that would be appreciated by the expat.
Other things to consider are exchange rates, 401k plans, and other monetary issues. If someone is willing to relocate, travel very far, put themselves in uncomfortable situations, and be far from their family, they should be compensated better than they were at home. Making sure that the company is taking into account exchange rates of currencies and setting the employee up for success is extremely important.
Overall, making sure the expat is comfortable in their new country is important to both the employee and the company. If they are uncomfortable, their performance in the workplace can be affected. Keeping them safe, compensated properly, and comfortable will make for the most successful pairing.