Direct Financial payments are of two types.

Time based or performance based

The correct answer is option (3) : Time based or performance based

Compensation

All organisations need to establish wage and salary plans for their employees. There are various ways to prepare different pay plans depending on the worth of the job. Basically the price of the job needs to be determined. Compensation, therefore, refers to all forms of pay or rewards going to employees. It may be in the form of direct financial payments like wages, salaries, incentives, commissions and bonuses and indirect payments like employer paid insurance and vacations.

Direct financial payments are of two types : time based or performance based. A time based plan means salary and wages are paid either daily, weekly or monthly or annually. Performance based plans means salary/wages are paid according to piecework.