Total direct compensation
It refers to the total value of cash pay, long term incentives and benefits offered to an employee.
Total direct compensation = Total cash + Long term incentive + Benefits
Example:
Let's say we have an employee that received last year the following gross amounts:
- Basic pay (salary) per month - 1000
- Christmas bonus - 1000
- Performance bonus - 2000 - twice a year
- Sales bonus - 3000 - once a year
- Meal vouchers - 300 per month
All of the above are elements of total direct compensation.
Total direct compensation = (1000 x 12) + 1000 + (2000 x 2) + 3000 + (300 x 12) = 23600
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