A Compensation Adviser

As described so far in this chapter, compensation plan design includes decisions regarding the compensation level and mix (salary versus incentive), the measures of performance, and performance-payout relationships. Designing a good plan is a challenge. However, implementing a new plan is even more challenging. This section provides advice on how to implement successfully in a number of common situations.

Figure 10-42. Incentive Payout Schedule That Avoids Early Overpayment.
Payment ScheduleCumulative Payment
First-quarter payment15% of annualized incentive payment based on firstquarter results.
Second-quarter payment35% of annualized incentive payment based on firstand second-quarter results.
Third-quarter payment60% of annualized ...

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