Merit pay is
A)a contingent amount of pay that is earned by managers whose subunits meet a target rate of return.
B)always for a limited period of time and must be re-earned each period.
C)any pay earned when the company is profitable.
D)a pay increment received when a specific performance level is achieved.

Question

Quizplus · Accepted Answer

Merit pay is a pay increment or increase that an employee receives when they achieve a specific level of performance, such as meeting or exceeding their goals or targets. It is typically not a permanent increase and must be earned again in future periods. Therefore, option D is the correct answer. Option A is incorrect as it describes a form of profit sharing, not merit pay. Option B is incorrect as merit pay is not always for a limited period of time, although it may be structured that way in some organizations. Option C is incorrect as profitability does not necessarily equate to merit pay.

Merit Pay Is