Compensation is comprised of four core elements: Fixed pay Also known as "base pay," fixed pay is nondiscretionary compensation

that does not vary according to performance or results achieved. It usually is determined by the organization's pay philosophy and structure. Short-term incentive pay A form of variable pay, short-term incentive pay is designed to focus and reward performance over a period of one-year or less. Variable pay Also known as "pay at risk," variable pay changes directly with the level of performance or results achieved. It is a one-time payment that must be re-established and re-earned each performance period.

Long-term incentive pay A form of variable pay, long-term incentive pay is designed to focus and reward performance over a period longer than one year. Typical forms include stock options, restricted stock, performance shares, performance units and cash.

Types of Compensation

Base Wages Salary Pay Hourly Pay Piece Rate Pay Premium Pay Shift Differential Pay Weekend/Holiday Pay On-call Pay Call-In Pay Hazard Pay Bi-Lingual Pay Skill-Based Pay

Variable Pay Commissions Team-Based Pay Bonus Programs Incentive Pay - Short-term - Profit Sharing - Individual Performance Based Incentives - Performance-Sharing Incentives - Long-term - Restricted Stock - Performance Shares

Compensation and benefits (abbreviated C&B) is a sub-discipline of human resources, focused on employee compensation and benefits policy-making. It is also known in the UK as total reward and as remuneration in Australia and New Zealand.

The basic components of employee compensation and benefits

Employee compensation and benefits are basically divided into four categories: 1. Guaranteed pay monetary (cash) reward paid by an employer to an employee based on employee/employer relations. The most common form of guaranteed pay is the basic salary. 2. Variable pay monetary (cash) reward paid by an employer to an employee that is contingent on discretion, performance or results achieved. The most common forms are bonuses and sales incentives.

3. Benefits programs an employer uses to supplement employees compensation, such as paid time off, medical insurance, company car, and more. 4. Equity-based compensation a plan using the employers share as compensation. The most common examples are stock options.

Compensation of employees (CE) is a statistical term used in national accounts, balance of payments statistics and sometimes in corporate accounts as well. It refers basically to the total gross (pre-tax) wages paid by employers to employees for work done in an accounting period, such as a quarter or a year. However, in reality, the aggregate includes more than just gross wages, at least in national accounts and balance of payments statistics. The reason is that in these accounts, CE is defined as "the total remuneration, in cash or in kind, payable by an enterprise to an employee in return for work done by the latter during the accounting period". It represents effectively a total labour cost to an employer, paid from the gross revenues or the capital of an enterprise. Compensation of employees is accounted for on an accrual basis; i.e., it is measured by the value of the remuneration in cash or in kind which an employee becomes entitled to receive from an employer in respect of work done, during the relevant accounting period - whether paid in advance, simultaneously, or in arrears of the work itself. This contrasts with other inputs to production, which are to be valued at the point when they are actually used. For statistical purposes, the relationship of employer to employee exists, when there is an agreement, formal or informal, between an enterprise and a person, normally entered into voluntarily by both parties, whereby the person works for the enterprise, in return for remuneration in cash or in kind. The remuneration is normally based on either the time spent at work, or some other objective indicator of the amount of work done.