Incentive Pay

“Incentive pay” is a financial reward provided to employees or leaders above and beyond their base salaries. Companies often award incentive pay to high-performing employees as part of the overall employee value proposition (EVP) or retention strategy. 

Some examples of incentive pay include sales commissions, year-end bonuses, and stock options. Companies that leverage incentive pay must carefully consider the structure, establish guidelines, objective criteria for awards, and must clearly communicate these things to employees to avoid inequities in the model.