Target Compensation

The expected pay for a position, including both base pay and at-risk pay. The variable portion of target compensation is based on what the employee ought to earn on average, given satisfactory performance, as opposed to On-Target Earnings, which tends to be a higher.

High performers will exceed target earnings and poor performers will fall short of the target. Target compensation is used primarily in sales compensation, but as at-risk pay becomes more widely used, so does the term.