  Incentive plans involve payments for performance relative to some set of
goals. In this paper, we extend Data Envelopment Analysis (DEA) to the
evaluation of performance in the specific context of pay-for-performance
incentive plans. The approach proposed ensures that the evaluation of
performance of decision making units (DMUs) that follow the implementation of
incentive plans, is made in terms of targets that are attainable, as well as
representing best practices. A model is developed that adjusts the benchmarking
to the goals through the corresponding payment of incentives, thus DEA targets
are established taking into consideration the improvement strategies that were
set out in the incentive plans. To illustrate, we examine an application
concerned with the financing of public Spanish universities.
