Performance Unit Award Agreement

If you`re a business owner or HR professional, you may have heard of a performance unit award agreement (PUAA). This type of agreement is becoming increasingly popular as a way to incentivize and reward employees for their hard work.

But what exactly is a performance unit award agreement, and how can it benefit your organization? In this article, we`ll break down the basics of PUAA and explore its advantages.

What is a Performance Unit Award Agreement?

A performance unit award agreement is a type of performance-based compensation plan in which employees receive units for hitting certain performance benchmarks. These units can then be redeemed for cash or equity in the company.

The purpose of a PUAA is to incentivize employees to perform at their best and contribute to the overall success of the company. By tying rewards to specific performance metrics, employees are motivated to work harder and smarter.

PUAAs can be structured in a variety of ways, but typically involve a set of performance criteria that employees must meet in order to earn units. These criteria may include sales targets, customer satisfaction ratings, project milestones, or other measurable goals.

Benefits of a Performance Unit Award Agreement

There are many advantages to implementing a performance unit award agreement in your organization. Here are just a few:

1. Encourages high performance: By tying rewards to specific performance benchmarks, PUAAs motivate employees to work harder and more efficiently.

2. Aligns employee and company goals: PUAAs help ensure that employees are working towards the same goals as the organization, leading to greater alignment and productivity.

3. Provides a tangible reward: PUAAs offer employees a tangible reward for their hard work, which can boost morale and motivation.

4. Helps retain top talent: By offering competitive compensation packages that include performance-based rewards, organizations can attract and retain the best employees.

5. Encourages teamwork: PUAAs can be structured to reward teams as well as individuals, promoting collaboration and teamwork.


A performance unit award agreement is a valuable tool for incentivizing and rewarding employees for their hard work and contributions to the organization. By tying rewards to specific performance benchmarks, PUAAs encourage high performance, align employee and company goals, provide tangible rewards, help retain top talent, and encourage teamwork.

If you`re considering implementing a PUAA in your organization, be sure to consult with legal and financial experts to ensure that your plan is compliant and effective. With the right structure and execution, a performance unit award agreement can be a powerful tool for achieving your business goals.