Compensation Dictionary
A COMPILATION OF KEY COMPENSATION TERMS
In an effort to provide our readers with valuable resources, we have put together this dictionary of key compensation terms that will be helpful to anyone in the compensation field. Here you will find all the terms you need to know to have a good grasp on the language of compensation.
The Compensation Dictionary is also available as a PDF.
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A form of non-cash pay an organization can offer its employees to encourage retention by allowingthem to partake in ownership of the company through various plans such as stock options,performance shares and restricted stock. Participating employees can share in the organization’sprofits through appreciation.
Beyond salary and cash compensation, these benefits provide an additional way to reward andretain key executives and employees. Examples include: 401k, SERPs, stock options, goldenparachutes, etc.
An employee exempt from the Fair Labor Standards Act (FLSA) regulations and therefore excludedfrom minimum wage and overtime requirements. Exempt employees are paid a yearly salary ratherthan an hourly wage.
Equal to the volume-weighted average trading price of the Company Stock occurring on theNYSE on the Grant Date.
A system or method put in place to motivate employees of all levels and boost performance toachieve certain goals and objectives.
Provides guidance related to factors which the IRS views as determinants of establishing reasonablecompensation levels.
A company’s reward system designed to improve employee’s long-term performance and rewardemployees for achievement of strategic objectives that will maximize shareholder value.
An analysis that compares similar companies with similar jobs to determine competitive salary andcompensation levels.
A special option-based valuation simulation that takes into consideration the terms of the plan,payout rates, potential future returns, and other factors to estimate a fair value of the award.
The proportion of net profits paid out to particular investors or employees according to theirpercentage stake in the company.