Remuneration

DEFINITION of 'Remuneration'

Remuneration is payment or compensation received for services or employment. This includes the base salary and any bonuses or other economic benefits that an employee or executive receives during employment.

BREAKING DOWN 'Remuneration'

Remuneration often refers to the total compensation received by an executive, which includes not only the person's base salary but options, bonuses, expense accounts and other forms of compensation. The amount of remuneration and the form it takes is dependent on many factors, including the employee's value to the company (full-time versus part-time; executive position versus entry-level), the job type (salaried versus hourly pay; commission versus base pay; tipped positions) and the company's business model (some companies offer bonuses or employee stock options while others do not). One company might try to hire a desirable employee of another company by offering them better remuneration. In the cases of executives, this corporate "wooing" is known as a golden hello.

Many people argue that the top executives at many companies have unreasonably high remuneration. If you're investing in a company, this is key information to have. For more information and to learn how to determine whether the company in which you're investing is looking out for the best interests of its stockholders, read Executive Compensation: How Much Is Too Much? There are also many misconceptions about the value of one job versus another. (For more, see: Compensation Myths: Burger Flipper Vs. Investment Banker.)

Types of Remuneration

Remuneration refers to the monetary rewards that an employee receives, but these rewards can take different forms. For example, some positions pay a salary, while others pay by the hour. Many sales positions offer a commission on the sales made by an employee, or a percentage of the amount sold. Some of these commissioned positions offer a base salary, whereas others are solely dependent on commission. Many positions in the food service and hospitality industries rely on tips, as their base pay does not meet the minimum wage.

Another type of remuneration is deferred compensation, which sets asides an employee's earnings to be redeemed at a later date. One common example of this is a retirement plan. To understand the reasons why it might be a good idea to enroll in such a program, see: Benefits of Deferred Compensation Plans.

Remuneration also refers to the benefits an employee receives from his or her company. These can come in the form of health insurance, gym memberships, the use of a company cell phone or company car, and more, depending on the company. If an employee is injured or becomes disabled during employment, he or she is also entitled to workers' compensation.

Minimum Wage

The minimum wage is the lowest remuneration an employer can legally offer to his or her employees. It is enforced by federal law, and can vary by state, as long as the state amount is higher than the federal amount. Minimum wage tends to increase as inflation rises; however, this is often not the case, and is a subject of heavy debate. (For more, see: Is the Minimum Wage Fair?)

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