Example language for base salary plus incentive compensation based on single, stated threshold amount

This language may be used when, in addition to a base salary, a physician employee will receive incentive compensation in excess of an incentive threshold, which is a single, stated amount. As an incentive bonus, the physician may earn a given percentage of net collections from the physician’s personally performed services in excess of the threshold amount. In setting the threshold amount, the employer should consider the amount necessary to cover the direct and indirect costs associated with the physician’s practice.

Example language:

1.      Base salary. Employer shall pay to Physician a base salary equal to _________ dollars per year, or pro rata portion thereof plus: 

2.       Incentive compensation. As a bonus, Physician shall receive an amount equal to ____________ percent (___%) of the physician ‘s net professional fee collections in excess of the Incentive Threshold The Incentive Threshold shall be an amount equal to ________________ dollars. 

3.       Cap. In no event shall the total compensation payable to Physician, including base salary and lncentive Compensation, be greater than  S                  per year.

About the Author

Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.