What Is Remuneration?

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

Key Takeaways

  • Remuneration refers to the total amount an employee receives for performing a service or for being employed by a company or organization.
  • In the case of executives, remuneration is a reference to the combination of salary, options, bonuses, and other financial compensation.
  • Deferred compensation, such as a retirement plan, is another component of remuneration for some employees.

Understanding 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—whether the person is full-time vs. part-time, holds an executive position vs. entry-level, etc.
  • The job type—whether it is salaried vs. hourly pay, whether the earnings are commission vs. base pay, tipped positions, etc.
  • 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 better remuneration. In the case of recruiting executives, this corporate "wooing" is known as a golden hello. Many people argue that the senior executives at many companies have unreasonably high remuneration. If you're investing in a company, this is important information to have.

Special Considerations

The minimum wage is the lowest remuneration an employer can legally offer to a potential employee. Minimum wage 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, though this is not always the case and is the subject of heavy debate.

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 foodservice 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 aside an employee's earnings to be redeemed at a later date. One common example of this is a retirement plan.

Remuneration also refers to the benefits an employee receives from their company. These can come in the form of health insurance, gym memberships, the use of a company mobile device or company car or others, depending on the company. If an employee is injured or becomes disabled during employment, they may also be entitled to workers' compensation.