Salary Survey and Benefits Terms

Paid Sabbatical - An executive benefit that allows a paid leave of absence for a predetermined period of time, usually to let the executive follow another endeavor.

Paid-Up Policy - An insurance policy that has already been paid, therefore no further PREMIUM is due for services that are received at a future date.

Paired Comparison - An arranging technique that compares the occupations being evaluated to all other jobs to determine which of the positions has a higher value.

Par Value - For stocks: a random number given to a stock that is issued, due to the registration requirements of particular states. Not all states have a par value for shares.

Parachute - An employment contract that states if there is a change in control of the corporation, there will be an increase, accelerated payments, vesting or some other rights to the employee once the change is final.

Part-Time Basis - Refers to an employee working 20-80% of normal full-time hours (40 per week).

Participant - An employee who is currently eligible, or will be eligible in the future, for company benefits. A participant may also include a beneficiary or a dependent.

Participation - This means an employee is actually active in a compensation plan.

Participation Percentage - The amount of individuals given pay increases as a percentage of all of the employees in that group.

Past Service - The time of employment prior to a pension policy beginning or being amended or the time before that employee had begun participating in the plan.

Pay Adjustments - A universal change in pay raises.

Pay as You Go - The typical technique for financing Social Security, where current workers'' Social Security taxes pay for current retirees'' benefits.

Pay At Risk - A changeable pay policy that is funded by a reduction of base pay, which is typically offset by the chance that a larger variable pay policy will payout when base pay is not at risk.

Pay Compression - A term used to describe differentials in pay that are too little to be considered equitable. May be applied to the differences between (1) a supervisors pay and that of a subordinate and (2) the pay of an experienced employee versus that of a newly hired employee.

Pay Equity - The general concept that equal work deserves equal pay. This is different from comparable worth, which suggests there should be equal pay for work of equal value.

Pay for Time Not Worked - An employee is paid for the time that was not actually worked, such as holidays, jury duty, and personal days.

Pay in Lieu of Notice - A pay arrangement for employees who have been terminated that is a continuation (for a specific period of time) of the usual pay and usual benefits after the last day.

Pay Plan - A list of pay ranges or rates for each job in the plan classification. Might also include administration rules and benefits.

Pay Policy - A specific position of a company''s pay with respect to the jobs competitive pay at a specific time.

Pay Policy Line - The pay level that a company sets its pay at compared to the market pay, typically the midpoint of the pay structure is set to judge the going market rate.

Pay Range - Usually used to determine individual employee pay, this term refers to a range of rates, from the minimum to the maximum for a particular class or grade of employees.

Pay Range Overlap - The level to which pay ranges in adjacent grades in a category overlap.

Pay Satisfaction - When employees think that the salary they are paid is fair in comparison to the work they actually perform.

Pay Steps - Specific levels in a pay range. An employee may move up pay steps depending upon their performance, time at the same grade, new job skills or performance.

Pay Survey - Data gathered regarding salaries and wages. These surveys are paid for by other employers that seek specific information on market rates for benchmark jobs.

Payable Claim - A claim for which an insurance company is liable under the policy''s terms.

Payee - The individual to whom benefits are payable, as stated in the supplementary contract.

Payout Frequency - The time that incentives are paid. Can be paid weekly, monthly, per quarter, or yearly.

Payroll Deduction Plan - A payment method in which the employer deducts the PREMIUM from the individual employee''s paychecks and sends it to the insurer.

PBA - Principal Business Activities are IRS definitions of industry classifications.

Pension - A fixed sum of money that is paid to a person who has retired and is entitled to receive the benefit under the pension plan.

Pension Benefit Guaranty Corporation (PBGC) - A federal corporation that insures the benefits of defined benefit pension plans. The PBGC is supposed to ensure that all plan participants receive their vested benefits, even in the event that the pension plan goes bankrupt.

Pension Benefits Guarantee Fund - In the Canadian province of Ontario, a fund is created to guarantee that benefits are paid in the event of insolvency of a pension plan.

Pension Benefits Standards Act - Federal legislation in Canada that regulate administration of pension plans for federal employees and other employees who may fall under this legislative authority.

Pension Equity Plan (PEP) - A kind of defined benefit pension plan that bases its retirement on final pay, however the percentage at a certain rate per year based upon the individual''s age and/or service.

Pension Fund - A fund set up to manage the assets and pay for the pensions of retirees.

Pension Index - An index utilized by the Canadian Pension Plan and Quebec Pension Plan to change the pension payments to incorporate the effects of inflation.

Pension Plan - A benefit plan that offers retirement benefits from a trust or another fund, via the purchase of insurance or from an unfunded plan.

Pension Trust Fund - A fund that is made up of money that has been contributed to by both the employer and the employee for pension benefits. A TRUSTEE takes the funds and invests the money, collects the earnings and interest and distributes the benefits.

Pension Versus Lump Sum - A pension is a retirement benefit that is paid periodically, while a lump sum is paid all at one time.

Percentage Contribution - The total PREMIUM that a company member would pay or pays to a contributory insurance plan.

Percentage Method of Withholding - Refers to a method of determining income taxes to be withheld by adding wages for a particular payroll period to total wages already paid during the year; dividing the aggregate by the number of payroll periods; and deducting any excess tax from current payment of wages.

Percentage Participation - A provision of a policy, typically found in major medical insurance, in which the insured employee and the insurer share the medical and hospital expenses in a predetermined ratio (e.g., 80%:20%), after the DEDUCTIBLE is met. Also known as a form of cost sharing.

Percentile - A percentile is a value on a scale of one hundred that indicates the percent of a distribution that is equal to or below it. In general, a percentile greater than 75 is considered above normal, and stated another way - 75 percent of the surveyed population is paid below you - and only 25 percent are paid above you, 1) a percentile between 25 and 75 is considered normal , 2) a percentile at 50 percent is equal to the median, 3) a percentile less than 25 is considered below normal, or alternatively, 25 percent of the surveyed population is paid below you and 75 percent are paid above you.

Performance Appraisal - A method used to determine how well an employee has performed during a specific time period. Usually utilized in determining salary increases.

Performance Based Restricted Stock - Restricted shares of stock that are awarded to an executive and are contingent upon the attainment of internal or external performance goals or an increase in the price of the company stock.

Performance Culture - A group of averages and attitudes regarding performance in an organization.

Performance Cycle - Job incumbents performance taken on a year to date cycle.

Performance Dimensions - Phases of performance that are imperative to an occupation by which the incumbent will be measured.

Performance Log - A written log that is kept by managers to remember behaviors that were effective and ineffective with regard to certain performance standards during the appraisal period being measured.

Performance Management - A process utilized by managers that is made up of planning and managing performance via observation and feedback. The process also includes bettering performance through development, assessing and rewarding performance.

Performance Measurement - Any method utilized to gather data that provides a basis for appraising performance.

Performance Period - The time period for which performance is measured.

Performance Targets - Job duties or behavioral goals that are predetermined in order to provide a comparison for performance appraisal purposes.

Performance Unit Plan (PUP) - Closely resembles a performance share plan, however the unit value is not related to the stock price. The award payment could be is stock, cash or a combination of the two.

Perquisite - Special benefits (perks) for high level executives and other managerial employees. This income is taxable to the employee. Some of these perks may include club memberships, legal counseling, and special parking.

Person-Based Pay - Compensation based on skill or knowledge instead of a specifically defined job.

Personal Leave - Leave from the workplace for a specific period of time due to reasons not covered by other leave options (such as vacation, maternity, jury duty or bereavement). Each employer is left to establish their own policy, possibly including: (1) the number of days granted per year and whether that number depends on length of service or attendance; (2) whether an employee must state how the time off will be used; and (3) how much advance notice must be given prior to taking personal leave. Personal days generally are not cumulative - workers must use them within the year they are granted.

Phantom Stock (Full Value) - An incentive plan that is long term, in which the participant is given the compensation in cash that is determined by a formula. A full value plan pays the full value. The formula does not have to include the actual price of the stock.

Phantom Stock (Incremental Value) - The concept is similar to the phantom stock full value, however the payment is an appreciation or increase in value as determined by the formula. The formula does not have to include the actual price of the stock.

Piece Rate - A performance payment to an employee based upon production. Payment is given based upon each piece or quantity of work that is produced by an individual employee.

Piece Work - An incentive payment is given for work that has been completed. The pay is dependent upon the amount of items produced or operations finished.

Pre-Retirement Counseling - Preparation for the financial and emotional changes that occur during retirement. This may be in the form of literature to employees, group meetings or individual counseling led by a trained professional, or software programs.

Preferred Shares - Capital stock that gives a certain DIVIDEND, which is paid prior to any dividends paid to the common stock holders, and that takes priority over the common stock if the company must liquidate.

Preferred Stock - Capital stock that gives a certain DIVIDEND, which is paid prior to any dividends paid to the common stock holders, and that takes priority over the common stock if the company must liquidate.

Premium - (1) An amount that is added to a base salary to pay additional monies for situations such as graveyard shift, working weekends, or working away from home. (2) In an international situation the definition relates to an incentive that is paid to an expatriate. (3) One payment or a sequence of payments made for an individual or for a group to continue the insurance policy that is in force.

Premium Conversion - Provision that allows employees to make a contribution, pretax, to an employer sponsored health or welfare plan.

Premium Deposits - Money that is left on deposit with the insurance carrier to pay for future premiums.

Premium for Risk - The usual amount of presumed additional return on investment, which is required by investors when they choose a higher-risk investment.

Premium Pay - An amount that is added to a base salary to pay additional monies for situations such as graveyard shift, working weekends, or working away from home.

Prevailing Wage Rate - The salaries that other employers pay for labor in similar markets. These wage rates are typically used with immigration pay analyses, where General Administrative Letter 2-98 requirements must be met. See www.erieri.com/freedata/hrcodes.

Preventive Coverage - Health insurance plan benefits are designed to insure that more serious coverages and benefits are not necessary.

Price At Exercise - The price of a stock at the time a person exercises the option.

Primary Earnings Per Share - These are earnings available to a stock divided by the number of shares outstanding. Available earnings are usually determined by net earnings after taxes and preferred dividends.

Primary Provider of Benefits - Under circumstances when coordination of benefits occurs, the medical expense plan that covers the benefits under this plan prior to any benefits being paid by another medical expense plan.

Productivity - A measuring of an operation''s efficiency, typically including a comparison of outputs to inputs.

Profit Sharing Pension Plan - A money purchase pension plan in Canada that links employer contributions to company profits. Employers are required to make a minimum contribution of 1% of employee earnings, even if the company was not profitable. The plan must adhere to the same legal provisions as pension plans.

Profit Sharing Plan - An agreement between an employer and the employees, in which the profits of the company are shared with the employees. Typically a pot of money is established based upon the total profits of the company. This is then distributed to all employees or the designated group by some criterion, such as the employees percentage of the total wages of the group.

Profits - In business: the result of selling goods or services for more than the cost of producing them. In investment: profits result from selling commodities or securities for a higher price than the cost of purchasing them.

Progressive Incentive Formula - An employee rewards plan that increases the incentive as the employee''s performance exceeds predetermined standards.

Promotional Increase - An increase in an employee''s salary due to a promotion.

Proxy Reporting - An SEC requirement for public corporations to reveal the compensation (in a summary compensation table) of the five highest paid executives. Since 1992, the Security Exchange Commission (SEC) has required public corporations to disclose the compensation received by the four highest paid officials in the corporation in the form of a table, entitled Summary Compensation Table. The results of this table are available in the Executive Compensation section of this Platform Library CD-ROM for all 12,000 publicly traded companies.

Proxy Statement - The SEC requires that publicly owned companies send out a document that alerts shareholders of the annual meeting, or any other special meetings. The proxy statement also discloses the issues that will be discussed.

Purchasing Power - When determining cost of living, an index must be referred to that determines the strength of the dollar for the purchasing of goods and services.

Pure Endowment - An amount of money that is only paid to the individuals who remain living for a specific period of time. If they do not live for the certain time period, they do not receive any of the endowment. This is typically illegal, unless it is combined with a form of LIFE INSURANCE.

Raise - An increase in wages or salary.

Range (1) - The difference between the maximum value and minimum value, (2) In reference to a pay grade, the amount that the maximum pay exceeds the minimum pay.

Range Penetration - An individual''s pay compared to the complete pay range. Range Penetration = (Pay - Range Minimum) / (Range Maximum - Range Minimum).

Range Spread - Usually used to determine individual employee pay, this term refers to a range of rates, from the minimum to the maximum, for a particular class or grade of employees.

Ranking Method of Job Evaluation - A job comparison that results in the ranking of jobs into a hierarchy beginning at the highest and ending at the lowest.

Rate - The money rate paid to an employee per hour.

Rate Range - Usually used to determine individual employee pay, this term refers to a range of rates, from the minimum to the maximum, for a particular class or grade of employees.

Rated Policy - An insurance policy that covers a person classified as a greater than average risk of loss. The policy''s PREMIUM rate may be higher than the rate for a standard policy or the policy is issued with special limitations, or exclusions or both.

Rating Classes - Three various techniques that insurance companies use for mortality assumptions to determine group life premiums. The methods are rating are: experience rates, manually rated and blended.

Rating Manual - A manual used by underwriters for determining premiums. It includes suggested ratings, but very little background for the impairments listed.

Re-Enlistment Bonus - A monetary incentive paid to an expatriate to stay on the current assignment longer than initially expected.

Real Wages - Earnings that are deflated by a price index. It is utilized as an index of the purchasing strength of the dollars received from salary.

Recognition Program - A process in which employees efforts and successes are recognized.

Recruitment Bonuses - Reward payments that are given to entice a new employees to accept a job offer. The rewards may be paid at the time the employee begins the employment, or over a pre-agreed upon period of time.

Red Circle Rate - Used to describe an employee''s pay that is higher than the already determined maximum that was assigned to the job. Increases in pay are not usually given unless the range maximum exceeds the employee pay rate.

Referral Bonus - Payments that are given to an existing employee who recruits (1) a new employee so long as the new employee remains employed for a specific period of time or (2) a new client that produces new revenue for the organization.

Registered Pension Plan - In Canada, a pension plan that meets the Canadian Minister''s National Revenue requirements.

Registered Retirement Plan - A pension plan in Quebec that has been approved and registered by the Quebec Department of Revenue.

Registered Retirement Savings Plan (RRSP) - A policy in Canada that lets Canadian citizens create tax-sheltered accounts to accrue money for retirement.

Regressive Incentive - A decreasing incentive rate, as performance surpasses previously determined levels.

Regular Rate of Pay - The total compensation that is utilized to determine the overtime rates according the Fair Labor Standards Act.

Reload of Stock Options - When an employee (usually an executive) exercises a set of stock options by paying for the option shares with previously acquired shares that have appreciated in value. The employer in turn issues new options, to the employee. In this reloading of options, the employee re-acquires the shares surrendered to the company at the market price, as of the date of surrender. Thus, the employee benefits from any appreciation in those shares that may occur during the time between the first option exercise and the reload option exercise.

Relocation Premium - A lump sum of money given to an expatriate to help with the unusual expenses associated with relocation.

Remembrance Funds - A fund that pays for expenses such as obituary notices, flowers or small gifts in the event of illness, termination, hospitalization, or death for the employee or a member of the employee''s family. This fund is exempt from reporting for ERISA purposes.

Remote-Site-Allowance - A specific type of payment that is given to an employee if a work site is difficult to reach or isolated.

Remuneration - The sum of the financial and nonfinancial value to the employee of all the elements in the employment package.

Remuneration Strategy, Philosophy, Policy - The characteristics that assist in the administration and implementation of a remuneration plan at a company.

Renter''s Buying Power - The salary equivalent after taking into account the cost of living in the region.

Rest-And-Recreation Leave - Considered to be distinct and separate from regular vacation and/or home leave, this is time off, which is granted to expatriates from time to time, especially to those working in areas where living conditions are very difficult.

Restricted Stock - This is stock given to an employee or which is sold to an employee at a discount. The employee is typically prevented from selling or otherwise disposing of the stock for a specified period. The employee owns any dividends deriving there from; but if he or she should leave the company before the period of restriction, then he or she forfeits the stock.

Retired Lives Reserve - A fund set up by some employers into which they pay monies (on the behalf of employees), for the purpose of providing LIFE INSURANCE to the employees upon their retirement.

Retiree Benefit Reserves - In order to protect retirement benefits and to reduce non-funded liabilities of the company, many companies create reserves for payment of future health and insurance obligations. This is often done by establishing a tax-exempt trust to pay employees'' life, sick, accident, or other similar benefits. This can be done by establishing a tax-exempt trust to pay employees'' life, sick, accident, or other similar benefits. The employer may deduct its contributions to a VOLUNTARY EMPLOYEES'' BENEFICIARY ASSOCIATION (VEBA) to pay for the current costs of providing benefits and can, within limits, even deduct its contributions that are used to create reserves to pay estimated future costs.

Retirement - Defining retirement is a bit tricky. A person may retire from company A if he/she quits and is eligible for retirement benefits from that company. The person may turn around and go to work in company B but still be considered retired from company A. Alter

Retirement Plan - A Retirement Plan is an agreement on the part of management to provide a vehicle for the retirement income needs of employees. Such plans may be qualified or non-qualified for tax purposes. The two main types of retirement plans are DEFINED BENEIFT PLANS and DEFINED CONTRIBUTION PLANS.

Rewards System - As more companies look for better ways to attract, retain and motivate good employees in a competitive labor market, the pressure is growing to get rid of the old methods of compensation (which focusedon money and nothing else) and replace them with new methods. It has been shown that both job seekers and employees highly value advancement possibilities, emotional rewards, and learning. The reward system is a compensation method/package, which includes all of those attributes.

Roth Individual Retirement Account (IRA) - Beginning in 1998, taxpayers can make nondeductible contributions of up to $2,000 a year into a new Roth Individual Retirement Account (IRA). Unlike traditional IRAs, money (principal and accumulated earnings) is not taxed when withdrawn, as long as the withdrawal is made five years after the IRA is established and (1) is made on or after age 59 and one-half or on or after death or disability, or (2) for first time home buying expenses, subject to a lifetime maximum of $10,000.

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