Independent Investor Test
This test considers the return on investment indicated by the increase in the value of a corporation’s stock along with dividends paid during the time period in question. It looks at the company’s performance throughout the year to determine if the compensation to key employees is reasonable. Basically, an “independent” investor should be happy with the return on his/her investment and not object to the compensation paid to key employees. The rate of return must be high enough to warrant their pay.
Planning Compensation Incentives That Maximize Workforce Engagement
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Planning Global Compensation Budgets for 2024 - March Updated
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ERI Economic Research Institute was founded over 30 years ago to provide compensation applications for private and public organizations. ERI Economic Research Institute compiles the most robust salary, cost of living, and executive compensation survey data available, with updated market data for more than 1,100 industry sectors. ERI collects salary survey data from internal surveys, third-party salary surveys, and public sources to calculate geographic salary differentials and assist with compensation planning.
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Common Compensation Terms and Formulas
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