What is the purpose of compensation?

Base Pay:

·       Provide security and address short-term needs.

·       It provides employees with a guaranteed minimum level of compensation for their work.

 Short-term Incentives or STI (bonus and/or sales commissions):

·       To motivate and reward employees for achieving specific short-term goals, targets, or performance milestones within a defined period of a year or less.

·       Short-term incentives are typically tied to individual, team, or organizational performance.

·       STI also communicates what metrics and initiatives are a priority for an employer.

 Long-term Incentives or LTI:

•        Reward long-term strategic success with an incentive tied to company overall market performance/value and shareholder interests.

•        Opportunity to recognize and reward high performers and/or those with high potential.

•        Aid in the retention of eligible employees via vesting schedules.

•        Provide meaningful, competitive long-term value and wealth accumulation opportunity.

What would you add?

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