Compensation encompasses all forms of employee rewards, including cash salaries, bonuses, stock options, and benefits. The term remuneration dates back to 1477 and refers to payment for goods and services, while salary, derived from the Latin word for “salty money,” refers to fixed payment for labor. Executive-level employees often receive privileged compensation, including “golden parachutes” that can exceed their annual salaries.
Compensation is a broad term that is meant to represent all the ways an employee is compensated for work and role within a company. This can include a variety of rewards, from cash salaries to sales commissions and performance bonuses, stock options, expense accounts, and the use of company assets like planes, cars, and homes. A salary, on the other hand, is a subset of remuneration and refers to a fixed payment for labor or services that is provided on a regular basis. Both the terms salary and remuneration are ancient references that go back hundreds of years in human society, and have generally retained their original meanings over time.
The term remuneration derives from the year 1477 d. C. and from the original Latin word remunerationem, which literally means “payment” or reward for goods and services, and often refers to payments for official city or government duties. The term salary dates back to the later period of the Middle Ages, around 1350 AD to 1400 AD, and is derived from the Latin salary, which literally means “salty money.” While historical records are unclear as to the original meaning of the term, it is generally believed that Roman soldiers were sometimes paid in salt as a form of wages, as this was a major trade product of the day.
Compensation for regular employees at a company is often referred to simply as wages, as they are cash payments that are typically stripped of the additional employee benefits that remuneration includes. Employee incentives, such as performance bonuses and stock options, are typically targeted at managerial or executive levels within companies and are a key part of the total compensation paid to these employees. Senior staff can also routinely receive additional benefits, which are another key aspect of compensation. These include benefits such as various types of health and life insurance, retirement and child care payments, as well as assistance to further education through tuition reimbursement.
While many compensation benefits are offered as of 2011 to classify and feature employees within some corporations, such as health insurance coverage, executive-level employees often receive privileged and higher levels of related compensation. These increased forms of pay are often included in contracts and paid to executive staff, even if they perform poorly and end up being terminated. Such forms of compensation are often referred to as “golden parachutes,” which are lavish packages paid to laid off executives that can include millions of dollars in bonuses, severance packages, stock options, and more that can easily exceed the value of their annual salaries. .
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