What is Compensation?
Compensation means not just the total pre-tax wages paid to employees by employers for work performed during a certain accounting period, such as a month or quarter. It also means all consideration, whether in cash or in kind, that accounts for the employee’s total cost to the employer, which is paid out of the company’s capital or gross receipts.
Such other compensation includes retirement accounts, healthcare insurance, life insurance, vacation and sick leave and disability insurance. Employee compensation typically is one of a business’ biggest expenses. An estimated 92 percent of working Americans are employees receiving compensation from their employer.