Management Incentive Plans (MIP) provide annual incentive payments for achieving both business unit and individual objectives. MIP participants usually include director level, and above, job categories, although in some cases participation may include manager level personnel too.

Goals are normally some combination of business unit and individual objectives. The weighting of the two types of goals varies by job level. Senior positions tend to have a larger portion of their target incentive tied to business unit results; whereas weightings for lower level managers place greater emphasis on individual accomplishment.

Both corporate and individual objectives can be linked or unlinked. In unlinked designs, performance on one measure does not affect payout on another measure. In linked designs, performance on one measure DOES affect payouts on the other measures. The link design may be a hurdle ("x" must be accomplished before "y" is paid), or a multiplier (performance on "x" times performance on "y" provides the final payout.)

Target incentives, often expressed a percent of base salary, normally increase as job level increases. Incentive payouts are normally capped at twice the target incentive amount.

Funding for the MIP program is calculated as the summation of target incentives. Some companies may use a corporate funding pool, relying on earnings or growth results to "fund" the incentive plan. For others, target incentive amounts are adjusted up or down depending on overall corporate performance. Normally, a threshold provides a minimum level of acceptable performance before any incentive is paid.