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What Comprises Reasonable Compensation?
05/01/06
By: Paul R. Dorf, APD, Executive Compensation Strategies
Q: What Comprises Reasonable Compensation?
Answer: Reasonable Compensation refers to the level of compensation which is considered “within market range” for a particular position. However, numerous factors are taken into consideration when determining reasonableness, including, but not limited to:
The Individual’s:
- Education
- Experience
- Skills
- Duties
- Responsibilities
The Company’s: - Revenue size
- Geographic location
- Industry
- Compensation philosophy
- Hierarchy
The Industry’s:
- Market conditions
- Availability of talent
- Influencing economic conditions
When determining reasonableness, a detailed market study must be conducted which considers the above factors in order to make a reasonableness determination.
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