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Home > QFINANCE Dictionary > Definition of incentive plan

Definition of

incentive plan


program rewarding improved performance a program set up to give benefits to employees to reward them for improved commitment and performance and as a means of motivation. An incentive plan is designed to supplement base pay and fringe benefits. A financial incentive plan may offer stock options or a cash bonus, whereas a nonfinancial incentive plan offers benefits such as additional paid vacations. Awards from incentive plans may be made on an individual or team basis.

Related definitions of "incentive plan"

Recommended Further Reading (Term count)
  • Executive Rewards: Ensuring That Financial Rewards Match Performance
    by Shaun Tyson
    Effective management of executive rewards resides at the heart of a network of pressures and issues of central relevance to the management of organizational performance. These pressures can be represented diagrammatically to show how stockholder interests and corporate governance issues impact on business performance, objective setting, the motivation of executives, and the position of the organization as an employer in specific labor markets;...
  • Creating Value with EVA
    by S. David Young
    The value-based management movement is based on two assumptions. The first is that the main aim of any business in a market economy is to maximize shareholder value. The second is that markets are too competitive for companies to create such value by accident. They must plan for it. And that means having the right culture, systems, and processes in place so managers make decisions in ways that deliver better returns to shareholders.At the very...
incentive plan - Related Articles
  • Project Planning Techniques for Small and Medium Enterprises

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    One working definition of a project would be that it is a one-off job that has a known start time, a planned end time, and an intended outcome, and that it would include a defined scope of work, a budget, and personnel assigned to carry out the work. What distinguishes a project from regular work
    By Damian Merciar

  • Executive Rewards: Ensuring That Financial Rewards Match Performance

    Best Practice

    The decision of where to be in the market is a matter for corporate policy (for example, at the market median, or the upper quartile rate), reflecting labor market pressures and attraction and retention strategies. Short-term incentives are usually annual bonus schemes. Long-term incentive plans
    By Shaun Tyson


Definitions of ’incentive plan’ and meaning of ’incentive plan’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’incentive plan’ and other financial terms with our online QFINANCE Financial Dictionary.

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