Compensation Dictionary

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.

There are currently 6 Compensation Terms in this directory beginning with the letter R.
REASONABLE COMPENSATION
That which is consistent with the normal compensation for similar employees performing similar duties for similar companies under similar circumstances.

RECOGNITION PLAN
An employer’s effort to motivate employees by recognizing their achievements (length of service, exemplary one-time achievement, etc.) in the organization through methods of rewarding these achievements (ex. written or spoken thank you notes, cash “spot” bonuses, gift cards, etc.).

RESTRICTED STOCK
Compensation to employees in the form of company shares that cannot be issued until certain requirements have been met, such as years of service or achievement of performance goals.

RESTRICTED STOCK UNIT
Stock that is not fully transferrable until certain restrictions/conditions have been met. Upon satisfaction of those restrictions, the stock becomes transferrable to the person. They are often used as a form of employee compensation, and can be settled in actual shares or cash.

RETENTION PLAN
A plan put in place with the purpose of retaining key employees in an organization by offering certain incentives to reduce turnover and ensure employees are motivated to stay with the company long-term. A good retention plan aligns with business performance goals to allow for maximum return on investment.

RETENTION RATIO
An arrangement whereby a certain number or percentage of shares are required to be retained toward the satisfaction of stock ownership guidelines


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