What is total compensation and what does it include?
Total compensation is the full economic value an employee receives from an employer, including base salary, variable pay (bonus, commission), equity, benefits (health, retirement, PTO), and any other tangible or intangible value. It is broader than total cash compensation (which includes only cash) and broader than W-2 income (which excludes employer-paid benefits). Total compensation statements are commonly used to communicate the full package to employees, who typically underestimate the value of benefits.
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