Profit sharing

From Wikipedia, the free encyclopedia

Profit sharing, when used as a special term, refers to various incentive plans introduced by businesses that provide direct or indirect payments to employees that depend on company's profitability in addition to employees' regular salary and bonuses.

In publicly traded companies these plans typically amount to allocation of shares to employees.

In the United States, a profit sharing plan can be set up where all or some of the employee's profit sharing amount can be contributed to a retirement plan. These are often used in conjunction with 401(k) plans.

[edit] Management's share of profits

The share of profits paid to the management, or to the Board of Directors is sometimes called tantième ^[1]. This French language term is generally applied in description of business and finance of European countries: Germany, France, Belgium, Sweden, etc. It is usually paid in addition to the fixed salary and bonuses (the latter ones usually depend on profits as well, and often the concepts of bonus and tantieme are treated as one); rules vary depending on the country.