Base Pay

AAA

DEFINITION of 'Base Pay'

An employee's initial rate of compensation, excluding extra lump sum compensation or increases in the rate of pay. An employee's base pay can be expressed as a base hourly rate of pay or as an annual salary.

BREAKING DOWN 'Base Pay'

Extra forms of compensation that are excluded from base pay typically include: shift differential pay, on-call pay, pay for special assignment or incentive-based pay and bonuses.

As a general rule, an employee's base pay is the pay they will receive at a minimum, while extra forms of pay may or may increase the total pay above this level.

RELATED TERMS
  1. Signing Bonus

    A financial award, often issued in one or two lump-sum payments, ...
  2. IRS Publication 1244: Employee's ...

    A document published by the Internal Revenue Service (IRS) that ...
  3. IRS Publication 531

    A document published by the Internal Revenue Service (IRS) that ...
  4. Earned Income

    Income derived from active participation in a trade or business, ...
  5. Tip Income

    Income that a service professional earns that is not part of ...
  6. Stock Compensation

    A way corporations use stock options to reward employees. Stock ...
Related Articles
  1. Professionals

    Career Advice: Management Consulting Vs. Investment Banking

    Compare the career opportunities available in management consulting and investment banking. Learn about salaries, skills needed and work-life balance.
  2. Professionals

    Career Advice: Management Consulting Vs. Private Equity

    Compare the career paths of management consulting and private equity, using criteria such as skills needed, starting salary and work-life balance.
  3. Insurance

    Evaluating The Board Of Directors

    Corporate structure can tell you a lot about a company's potential. Learn more here.
  4. Retirement

    Pages From The Bad CEO Playbook

    Excess compensation, golden parachutes, tunneling and IPO spinning make these bad executives even worse.
  5. Options & Futures

    The Dangers Of Options Backdating

    This form of executive compensation can pose serious risks for investors.
  6. Options & Futures

    The "True" Cost Of Stock Options

    Perhaps the real cost of employee stock options is already accounted for in the expense of buyback programs.
  7. Options & Futures

    A New Approach To Equity Compensation

    The new financial accounting standard known as FAS 123R could take a bite out of your portfolio. Find out why here.
  8. Options & Futures

    A Guide To CEO Compensation

    Make sure you assess whether a CEO has a stake in doing a good job for you, the shareholder.
  9. Options & Futures

    Should Employees Be Compensated With Stock Options?

    Learn the good, the bad and the ugly sides of this type of payout.
  10. Options & Futures

    Executive Compensation: How Much Is Too Much?

    The proxy statement can help determine whether a CEO is well compensated - or just overpaid.
RELATED FAQS
  1. What moral hazards are present with salaried employees?

    A moral hazard occurs when a party acts differently knowing that he or she is protected from any kind of risk. This is a ... Read Full Answer >>
  2. What is the difference between AGI (adjusted gross income) and gross income?

    In the United States, individuals pay taxes based on their adjusted gross income, or AGI, rather than their gross income. ... Read Full Answer >>
  3. How is marginal propensity to save calculated?

    Marginal propensity to save is used in Keynesian macroeconomics to quantify the relationship between changes in income and ... Read Full Answer >>
  4. How can minimum wages contribute to a market failure?

    The minimum wage acts like a price floor on labor, reducing the supply of jobs available to a level below the market-clearing ... Read Full Answer >>
  5. How does the always be closing (ABC) strategy benefit a salesperson's sales funnel?

    It is good practice in sales to always be closing, because it's common for a salesperson's sales funnel to be leaky. When ... Read Full Answer >>
  6. How does Jeff Weiner make money from LinkedIn?

    LinkedIn CEO Jeff Weiner creates revenue for his company from user subscription fees, advertising and marketing operations, ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  2. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
  3. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
  4. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
  5. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  6. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!