Performance Bonus

AAA

DEFINITION of 'Performance Bonus'

A form of additional compensation paid to an employee or department as a reward for achieving specific goals or hitting predetermined targets. A performance bonus is compensation beyond normal wages and is typically awarded after a performance appraisal and analysis of projects completed by the employee over a specific period of time.

INVESTOPEDIA EXPLAINS 'Performance Bonus'

Not all companies offer bonus plans, and those that do often define the maximum amount that an employee can receive for exemplary performance. Companies that use an appraisal or employee review process may set a score threshold that an employee will have to meet or exceed in order to be considered. Because this bonus is given for performance above expectations, employees are not automatically entitled to it.

Performance bonuses may be given to an entire team or department if, for example, specific sales figures were met, or if the actions of that group were deemed to have been exceptional.

RELATED TERMS
  1. Employee Stock Option - ESO

    A stock option granted to specified employees of a company. ESOs ...
  2. Golden Parachute

    Substantial benefits given to a top executive (or top executives) ...
  3. Camouflage Compensation

    Compensation that is granted to upper echelon employees, directors, ...
  4. Bonus

    1. Additional compensation given to an employee above his/her ...
  5. Year-End Bonus

    A reward paid to an employee at the end of the year. Many year-end ...
  6. Strategic Management

    The management of an organization’s resources in order to achieve ...
Related Articles
  1. Evaluating A Company's Management
    Active Trading Fundamentals

    Evaluating A Company's Management

  2. A New Approach To Equity Compensation ...
    Options & Futures

    A New Approach To Equity Compensation ...

  3. Should Employees Be Compensated With ...
    Options & Futures

    Should Employees Be Compensated With ...

  4. Evaluating Executive Compensation
    Options & Futures

    Evaluating Executive Compensation

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center