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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:

  1. Basic pay (salary) per month - 1000
  2. Christmas bonus - 1000
  3. Performance bonus - 2000 - twice a year
  4. Sales bonus - 3000 - once a year
  5. 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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