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QUESTION: What do the "incentive" amounts represent?

 

In the Assessor Series, ERI uses the following definitions of Incentive to refer to differing components of variable compensation:

 

The Salaries by Experience/Size tab in the Salary Assessor profiles the Base Salary, Total Cash, and Incentive data of a specific position.

 

The Individual Profile tab in the Executive Compensation Assessor profiles the Base Salaries, Total Cash, and Incentive data of a specific position. For top jobs in the Executive Compensation Assessor, information on these compensation components is provided under the Survey and Proxy Analysis tab. This tab provides Salary, Bonus, Non-Equity, Total Cash, Stock Awards, Option Awards, Pension, Other, and Total. 

 

It is important to note how ERI uses the heading of Incentive. In both the Salary Assessor and the Executive Compensation Assessor, Incentive refers to annual variable cash (which may include  bonuses, commissions, short-term non-equity compensation, or other cash incentives). The heading of Incentive does not include stock awards, option awards, pension, or other non-cash compensation. These components are listed separately.

 

ERI determines the amount of the Incentive by taking the average dollar amount of the Incentive for all the incumbents whether or not they are cash-incentive eligible.

 

For example, there are 1,000 employees in a job classification. Eight hundred employees are bonus/commission eligible. Among the 800 employees who are bonus/commission eligible, a total of $200,000 dollars in annual bonuses/commissions is paid to 700 employees, while 100 of the bonus commission eligible employees receive no bonus/commission pay due to their individual and or company's performance. Out of the 1,000 employees in the classification, two hundred employees work for companies without a bonus/commission plan, so they receive no bonuses/commissions. The average Incentive (or bonus/commission in this example) shown by ERI is $200 (or $200,000 divided by 1,000 total employees).

 

For a definition of "base salary," see Assessor Series FAQ #36.

 

For a definition of "total cash," see Assessor Series FAQ #37.