What characterizes a short-term incentive plan?

A short-term incentive plan is primarily characterized by its focus on providing bonuses or rewards based on the achievement of specific performance goals within a relatively brief time frame, typically within a year. These performance goals could be financial targets, project milestones, or individual achievements. The incentive structure emphasizes immediate results, motivating employees to align their efforts with the company's objectives for that fiscal year or short cycle.

The essence of option B lies in its specificity—rewarding individuals for concrete outcomes achieved in a defined period is a hallmark of effective short-term incentive plans. This structure fosters a sense of urgency and accountability, encouraging employees to perform at their best to meet set targets.

While other options mention aspects like overall company performance or annual performance, they do not highlight the critical element of individual or specific goal achievement that distinguishes short-term incentives. For example, while overall company performance is essential, a plan focused only on that would not necessarily qualify as a short-term incentive. Similarly, the mention of guaranteed salary increases does not align with the variable nature of incentive plans, which are contingent on performance rather than guaranteed outcomes.