Profit sharing

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.

Europe

Management's share of profits

The share of profits paid to the management, or to the Board of Directors is sometimes called the tantième . This French language term is generally applied in describing the business and finance practices of certain European countries -, including Germany, France, Belgium, and Sweden. It is usually paid in addition to the manager's (or director's) fixed salary and bonuses (bonuses usually depend on profits as well, and often bonuses and tantieme are treated as the same thing); laws vary from country to country.

Historic uses

Profit sharing was part of the Nazi Party's twenty-five point program when the Party came to power. This part of the program was created by the Party in 1920. The Party demanded that all large industrial firms introduce profit sharing, and contended that profit sharing was a way to end "Jewish capitalism" (what anti-Semites perceived to be exploitation of German workers by wealthy Jewish business operators). The Party manifesto was filled with openly prejudiced demands that pandered to the Anti-Semitic views of that time in Germany.

See also

• Retirement plans in the United States