Principles of Partner Compensation

Source: Accounting Today

In today's challenging economy, many firms are rethinking their partner compensation strategies. Paul Finkle offers several principles to consider when designing a compensation plan, including:

• The plan should be simple to administer and understand.
• Base compensation should be logical -- tied to gross revenue or tenure, for example -- and, generally, should not be more than 60 percent to 70 percent of total compensation.
• Bonuses should be large enough to provide an incentive. Goals for bonuses should be related to the firm's strategy for the year and integrated with the performance of all partners and the firm as a whole.
• The plan should use benchmarked performance metrics and should view compensation both externally (in terms of market competitiveness) and internally (in terms of fairness).

For the complete article, click here and select the article "New Ways to Slice the Pie" under Practice Resources in the March 15, 2010, issue.

From Accounting Today, March 15, 2010, SourceMedia Inc., One State Street Plaza, 27th Floor, New York, NY 10004, 800-221-1809.