I think that what you are confusing it that the time value of money calculation at the corrected rate doesn't make sense when compensation is being discussed; in this case the time value of money rate needs to be at a compensation rate, which is the point i am making.
Getting 10% compensation, in my case, gives me a 2.8% "time value of money" rate.
Larger payments will most likely be over longer periods, whereby this will work in the banks favour.
The point is that you cannot assess whether x% is a fair amount doing it the way the banks are.
And it greatly overstates the compensation, for example i am getting 2.8% effective compound interest on my accreting interest overpayments, whereas the bank are saying that i am getting compensation of 10%.