2025 Employee Compensation Review Template - Examples for Various Scenarios
Employee compensation review templates are structured documents used to plan and record pay adjustments. They ensure a consistent, fair, and well-documented approach to salary changes, bonuses, and equity grants across all industries and company sizes.
Below, we explain how to design and use compensation review templates for various purposes (salary, bonus, equity). We also provide samples for both managers and HR, and discuss variations for different types of roles.
How to Create an Employee Compensation Review Template
Designing an effective template starts with clarifying what information needs to be captured. For example, you might include current compensation, proposed changes, rationale, and approval workflow.
The template should also align with your compensation philosophy, and be simple enough to use regularly.
Finally, you might prepare templates for different scenarios, such as annual review cycles (e.g. merit increases) or for ad-hoc adjustments (e.g. mid-year market corrections or retention bonuses).
Here are additional considerations for three common scenarios:
Salary Review Templates
Many organizations conduct salary reviews annually, using a template to standardize decisions and track performance-based raises. This type of template may include the employee’s current base salary, the recommended new salary or raise amount, and the percentage change.
It’s also important to capture the justification (e.g. performance rating, expanded role, market alignment) for each recommendation.
Finally, be sure to incorporate any relevant guidelines. For example, a merit increase matrix linking performance ratings to allowable raise percentages, or fields to compare the employee’s salary to market data (like a compa-ratio or salary range midpoint).
Bonus Planning Templates
This type of template is used for annual or periodic bonus payouts. It should list eligible employees and bonus criteria, such as current base salary, target bonus (% or amount), and performance results or metrics used to determine the bonus.
Ensure there’s space for manager comments or discretionary adjustments if your bonus program allows them. If bonuses depend on company results (e.g. a company performance multiplier), consider adding a field for that as well.
Equity Adjustment Templates
These are common for startups, tech firms, and executive compensation. They should record the employee’s current equity holdings (e.g. number of options or shares, or last grant amount/date) and the recommended new grant or adjustment. They can also include fields for the rationale, such as performance (e.g. an equity reward for top talent), market competitiveness (e.g. bringing the employee’s equity stake in line with market norms or peer roles), or retention needs.
While equity adjustments are not as frequent as salary or bonus reviews, having a template ensures any stock grants are documented and approved systematically. Ensure the template captures necessary approvals (e.g. CFO or Board approval for executive equity grants if applicable).
Manager-Facing vs. HR-Facing Templates
It’s useful to prepare two versions or views of compensation review templates: one for managers to propose or review changes for their team, and another for HR to compile and finalize decisions.
Both may contain similar core data, but their purpose and some fields differ:
- Manager-Facing Template: This is typically a form or spreadsheet that an individual manager fills out for their direct reports. It serves as a worksheet for recommending changes. Key columns include the employee’s name, department or team, current pay (salary, bonus target, etc.), and the manager’s recommended adjustment (new salary, bonus amount, equity grant). A comments or justification field is critical so the manager can document why they propose this change. Managers should use this template during the compensation review cycle (or for out-of-cycle requests) to ensure they apply consistent criteria. Providing managers with clear templates and guidelines helps them make data-informed, bias-free decisions and promotes consistency across all teams.
- HR-Facing Template: This is usually a master spreadsheet or database that HR uses to collect all manager submissions and track the overall process. It consolidates the data for all employees under review (often by merging all managers’ sheets or via an HR system export). The HR-facing template includes all the columns from the manager form (employee details, current comp, recommended changes, justification, etc.), and adds fields for HR review and approval. Including an approval status and HR sign-off ensures there is an audit trail and that each recommendation is evaluated for compliance with budget and policy.
Sample Compensation Review Template Structures
Below are sample templates in table format illustrating how you can structure compensation review data. These tables can be adapted in Excel, Google Sheets, Word, or used as a basis for an online form. Each row represents one employee’s compensation review record.
Sample Manager Compensation Review Form (Salary Adjustment)
This example shows a simplified manager-facing template for salary reviews. The manager lists each team member, their department and current salary, and proposes a salary increase with a brief justification. The last two columns (HR Reviewer and Approval Status) are left blank for HR to fill in after review:
In this HR tracking sheet, an additional column “Approved Salary” is used to record the final decision. In Alice’s and Carol’s cases, the manager’s recommendation was fully approved. Bob’s case shows an example where HR or leadership adjusted the amount. The manager recommended $90k, but HR approved $88k (perhaps due to budget limits or to position him at a certain market percentile), marking the status as “Approved (Adjusted).”
By having this consolidated view, HR can ensure each entry has been reviewed and that the total salary increase budget remains on target. It also serves as a record for audit or future reference, and helps in generating reports (e.g., total increases by department, average percent raise, etc.).
This template can be expanded with more columns, for example: Performance Rating, Salary Band/Range, Compa-Ratio, Effective Date of Change, etc., depending on what data the company uses in decisions.
Performance-Based Bonus Planning Template
The following is an example of a bonus calculation template (manager or HR can use) focusing on performance-based bonuses. Each row is an employee with their bonus eligibility and outcome:
In this template, an employee’s performance rating (on a scale from 1 to 5) determines the portion of the target bonus they actually receive. Higher ratings yield a larger percentage of the target bonus, while low ratings reduce or eliminate the bonus. The assumed mapping from performance rating to payout factor is as follows:
- 5 (Outstanding): 150% of target bonus (1.5× multiplier)
- 4 (Exceeds Expectations): 125% of target bonus (1.25× multiplier)
- 3 (Meets Expectations): 100% of target bonus (1.0× multiplier)
- 2 (Below Expectations): 50% of target bonus (0.5× multiplier)
- 1 (Unsatisfactory): 0% of target bonus (no bonus payout)
For example, Emily Johnson’s bonus is $36,000, which was calculated as $120,000 × 20% × 1.5. Her performance rating was 5 (Outstanding), giving her 150% of her 20% target bonus. In contrast, Daniel Anderson, with a rating of 1, receives no bonus payout (since 1 corresponds to 0% of the target bonus).
Sample Equity Adjustment Template (Retention Grant)
For equity changes, here is a sample template for proposing a stock grant or equity adjustment:
In this equity template, Current Equity Held describes the employee’s existing equity (type and amount).
Recommended Equity Grant details the new grant (number and type of shares/options).
The justification explains why this grant is needed. For example, Maria is a retention case for a top performer, Lee’s grant brings him up to market level for his role, Arjun’s grant is part of a long-term incentive plan (LTIP) for executives.
Note that equity grants for executives or large amounts often require higher approval (e.g. CFO or Board of Directors), so the Approval column reflects that (e.g. “Approved by Board” for Arjun after the Compensation Committee’s review). The manager here could be the department head proposing the grant, and HR or a compensation specialist reviews it.
This template helps standardize equity decisions, which can otherwise be case-by-case. It captures current ownership, and allows HR to evaluate how the new grant fits the overall compensation mix. It also ensures proper authorization is obtained for equity, which is crucial for compliance and transparency (especially in public companies).
Variations for Different Roles and Adjustment Types
When developing compensation review templates, consider variations needed for different employee groups and different reasons for pay changes. While the core information remains consistent, some tweaks improve relevance.
Individual Contributors vs. Leadership/Executive Reviews
The compensation template for an individual contributor (IC) typically focuses on the components that apply to most employees: base salary and maybe an annual bonus.
For many IC roles, equity might not be applicable (except in startups or tech firms where even junior staff get stock, in which case you’d include it). Templates for ICs should be simple and straightforward, capturing the essential data without too many extraneous fields. For example, an IC salary review form might not need to show the entire compensation package, just salary and perhaps bonus, to keep managers focused on immediate pay decisions.
In contrast, leadership or executive compensation reviews often require a more comprehensive template. Executives usually have multiple pay components, such as base salary, an annual incentive/bonus target, and long-term incentives (equity, stock options, etc.).
One approach is to list each exec and have columns like: Current Base, Proposed Base, Current Bonus Target, Proposed Bonus, Current Equity (or LTI) Value, Proposed Equity grant, etc., along with totals. This allows a holistic view of how the executive’s total compensation would change.
Additionally, for executives, you may incorporate fields for ratio of pay mix (e.g. percentage of comp in equity vs cash) or comparisons to market executive pay benchmarks. The template might also track approval at multiple levels (manager, HR, CEO, and Board Compensation Committee).
Despite these extra elements, the foundational columns (Name, current comp, proposed change, justification, approvals) remain the same, just repeated per component. Sometimes breaking the executive template into sub-tables per person can help (e.g. a mini-table for each exec’s pay breakdown), or use grouping in Excel to organize the data.
Example variation: In an IC template, you might not list a “Bonus target” if only senior staff have bonuses; whereas in an executive template, you would list last year’s bonus payout and next year’s proposed bonus. For ICs, equity fields might be hidden or not used if not applicable. In summary, tailor the columns to the relevant pay elements for the employee level. By doing so, you ensure the template remains useful for all levels – it’s detailed where needed for executives, and uncluttered for lower-level employees. (Some companies even maintain separate templates: one for “staff-level review” and one for “executive review” to account for these differences explicitly.)
Performance-Based vs. Market-Based Adjustments
Not all pay adjustments are for the same reason, and templates should accommodate both performance-driven and market-driven changes (as well as other reasons like promotions or cost-of-living). In many cases, an annual cycle will consider both: you want to reward high performers (merit increases) and also ensure no one is left behind market rates or inflation.
For performance-based adjustments, the template should ideally incorporate the performance metric driving the change. This could be a Performance Rating column (e.g. rating 1-5 from the last review) or a category (Exceeds, Meets, etc.), which justifies the merit increase.
The template might also have a column for “Guideline % Increase” next to the manager’s recommended increase, so that approvers can see if the manager’s proposal is in line with policy.
For market-based adjustments, the template should capture data that shows why an adjustment is needed to stay competitive. For example, the market median salary for the role, or the pay range minimum/midpoint/maximum for the job. HR might fill this in or provide it to managers.
Including a Compa-Ratio (current salary divided by market midpoint) or a Position-in-range (%ile) can quantitatively justify a change. For instance, if an employee is paid 80% of the market median, a manager might recommend a market adjustment to bring them closer to 100%. The justification would then note something like, “Below market – adjustment to reach 90% of median.
Market-based templates focus on external equity and retention: by documenting the external benchmark, they help decision-makers ensure the company’s pay stays competitive. If inflation or cost-of-living is a factor, you might also include an Inflation Rate or cost-of-living adjustment factor (especially for multi-location companies) as a parameter in the review sheet.
Replacing Compensation Review Templates with PerformYard
PerformYard offers a centralized, automated platform that streamlines the entire compensation review process, eliminating the need for manual Excel sheets or Word forms.
Instead of juggling separate templates, HR and managers manage salary increases and bonus decisions in one system where compensation and performance data are stored together for easy access.
This centralized approach also reduces manual errors and delays. Managers always have up-to-date salary information (via HRIS integration) alongside performance records, so they can review and approve compensation changes without tedious data gathering.
Another key advantage of PerformYard is how it tightly integrates compensation reviews with performance management to enable data-driven decisions. Managers can view an employee’s performance evaluations right alongside their salary and bonus history in the platform, directly linking pay to performance. HR teams can track merit increases and bonuses based on review scores, ensuring that high performers are rewarded fairly and consistently across the organization.
All relevant data–from goals achieved to past raise percentages–is in one place, allowing leadership to make compensation decisions backed by analytics and trends rather than guesswork. In fact, PerformYard helps collect and organize performance data to inform pay decisions (e.g. who should get a top-of-band raise), so the compensation review process becomes more objective and transparent.