Compensation Glossary
Welcome to ERI SalaryExpert's compensation glossary, your resource for commonly used terms, formulas, and phrases related to compensation.
Maximum Reasonable Compensation
In the IRS determination of reasonable compensation for owner-managers, one of the main considerations is that of comparable wages. Maximum reasonable compensation would be the highest amount of compensation, both wages and bonus, which would be allowable to be used as a business expense for services rendered in comparable circumstances. Based on IRS cases, ERI developed the definition in terms of the standard error of the distribution of compensation for comparable executives. This measure is approximately plus/minus 2.01 standard error. Very similar to the standard deviation, the standard error represents the range of pay in which one might find 90% of the population in a skewed distribution.
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ERI SalaryExpert was launched in 2000 by ERI Economic Research Institute to help organizations and individuals optimize salary planning. Our robust compensation management solution houses the global salary survey data and applications needed to design competitive and effective compensation structures. From benchmarking with reliable market data to analyzing geographic differentials and conducting pay equity analyses, our intelligent platform is an innovative way of merging integral salary survey data with efficient features, all in one system.
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Featured White Paper
Common Compensation Terms and Formulas - January 2026
Find commonly used compensation terms and formulas for your reference when planning compensation.
Ready to Streamline Your Compensation Strategy with Us?
Discover how our Assessor Platform can help you attract top talent, stay on top of market trends, and set your organization up for success, all in one platform.
Try a Free Demo
About Us
ERI SalaryExpert was launched in 2000 by ERI Economic Research Institute to help organizations and individuals optimize salary planning. Our robust compensation management solution houses the global salary survey data and applications needed to design competitive and effective compensation structures. From benchmarking with reliable market data to analyzing geographic differentials and conducting pay equity analyses, our intelligent platform is an innovative way of merging integral salary survey data with efficient features, all in one system.
Learn More