What is Remuneration

Remuneration is payment or compensation received for services or employment. This includes 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 vs. part-time, executive position vs. entry-level), the job type (salaried vs. hourly pay, commission vs. 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 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. 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 also are misconceptions about the value of one job versus another, as discussed in 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 aside 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 mobile device or company car or others, 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 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, though this is not always the case and is the subject of heavy debate. (For more, see: Is the Minimum Wage Fair?)