CECP key terms

Fixed cash compensation for the job itself, set by the employer's pay structure and paid regardless of individual or company performance, excluding overtime, bonuses, and other variable or benefit elements.

An individual's base salary divided by the midpoint of the assigned pay range, expressed as a percentage; values below 100% sit under midpoint and above 100% sit over it.

The minimum, midpoint, and maximum rates an employer sets for a grade or job level, defining the band within which actual pay is managed.

The central rate of a pay range, typically reflecting a fully competent performer and market-competitive pay, used as the anchor for range spread and compa-ratio calculations.

A measure of where an individual's pay falls inside a range, calculated as (pay minus minimum) divided by (maximum minus minimum), showing progress toward the top of the band.

A grouping of jobs of similar internal value and market worth that share one pay range, allowing consistent pay administration across comparable positions.

A systematic process for ranking or scoring jobs by factors such as skill, effort, responsibility, and working conditions to establish internal relative worth and support pay structure design.

The practice of matching an employer's jobs to survey benchmarks and using external pay data to set ranges and pay levels that are competitive in the relevant labor market.

A collection of compensation data from employers on benchmark jobs, reported by industry, geography, and size, used to benchmark pay levels and design competitive structures.

A representative position with stable duties, common in the labor market, and easy to match to survey data, used as an anchor for building pay structures.

The perceived fairness of pay differences among jobs within one organization relative to their contributions, typically supported by job evaluation and consistent range placement.

How an employer's pay levels and total rewards compare with those of relevant labor-market competitors, often expressed through a target percentile policy such as the median or 75th percentile.

Compensation that is not guaranteed and is earned based on performance, results, or other conditions, including annual bonuses, sales incentives, and gain-sharing awards.

An annual or more frequent cash award tied to achievement of individual, team, or company goals, typically paid after the performance period ends and not built into base salary.

A compensation philosophy in which pay increases and awards are differentiated by measured results or demonstrated competence, rather than granted uniformly across employees.

A permanent addition to base salary granted from a merit budget, usually based on performance rating and position in range, and distinct from lump-sum or general increases.

The combined value of all cash pay and benefits an employee receives, including base salary, incentives, and employer-paid benefit contributions, used to compare overall reward competitiveness.

An integrated framework covering compensation, benefits, work-life effectiveness, performance recognition, and development opportunities, viewed as the full value proposition offered to employees.

The distinctive bundle of pay, benefits, culture, career opportunity, and work experience an employer offers in exchange for employee performance and commitment, used in attraction and retention.

Indirect forms of compensation provided to employees in addition to cash pay, such as health coverage, retirement contributions, insurance, and paid time off, often partially employer-funded.

A retirement plan in which the employer promises a specified benefit at retirement, usually based on salary and years of service, and bears the investment and funding risk.

A retirement plan in which the employer contributes a defined amount, often matching employee contributions, and the employee bears investment risk, with benefits depending on account balance at retirement.

The process by which an employee earns a nonforfeitable right to employer-provided contributions or benefits over time, often subject to a schedule or cliff requirement.

A retirement plan that meets tax-code requirements for favorable tax treatment, including nondiscrimination rules, contribution limits, and reporting obligations, such as most 401(k) plans.

Required testing that checks whether a benefit plan disproportionately favors highly compensated employees, potentially forcing refunds or employer contributions to preserve the plan's tax advantages.

A statutory category of employee, generally defined by compensation thresholds and ownership tests, used in nondiscrimination rules governing retirement and other benefit plans.

The pay package provided to senior leaders, typically combining base salary, annual incentive, long-term equity, benefits, and perquisites, designed to align leaders with shareholder and organizational interests.

A multi-year award, often in stock or cash, intended to reward sustained performance and retain key employees, typically granted with vesting over three or more years.

Pay delivered in company ownership instruments such as stock options, restricted stock, or performance shares, giving recipients a stake in share value and typically subject to vesting.

The right, but not the obligation, to buy company shares at a set exercise price for a defined period, with value realized only when the share price exceeds that price.

Shares granted to an employee that are subject to forfeiture until vesting conditions are met, delivering value even if the share price does not rise above the grant price.

The fixed price at which an option holder may purchase shares, also called the strike price, usually set at the market value on the grant date.

A stock option whose exercise price is above the current market price of the shares, making immediate exercise economically unattractive and often prompting repricing or exchange programs.

A defined transaction such as a merger or sale of substantially all assets that triggers special treatment of executive awards, including accelerated vesting or severance protections.

A provision allowing an employer to recover previously paid incentive or equity compensation, typically after a restatement or misconduct, often required for listed-company executives.

An advisory shareholder vote on executive compensation disclosed in the proxy statement, giving investors a formal voice on the company's pay decisions and program design.

The compensation information public companies must publish in proxy statements, including pay tables, plan descriptions, and the rationale behind executive pay decisions.