Signing Bonus

AAA

DEFINITION of 'Signing Bonus'

A financial award, often issued in one or two lump-sum payments, offered by a business to a prospective employee as an incentive to join the company. A signing bonus may consist of cash and/or stock options. Businesses offer signing bonuses to highly qualified job candidates to differentiate themselves from other businesses where an individual might consider accepting a position. Typically only salaried jobs pay signing bonuses.

INVESTOPEDIA EXPLAINS 'Signing Bonus'

Signing bonuses are more common in certain industries and for certain positions. If the recipient of a signing bonus quits within a short time after accepting the position, he will probably have to return all or a pro-rated portion of the bonus.





Signing bonuses, like other types of bonuses, often appear to be a major windfall, but because the money is taxed at the recipient's marginal tax rate, much of the bonus will end up going to the employee's federal and state government. An individual who receives a $10,000 signing bonus and is in the 28% federal tax bracket will lose $2,800 of the bonus to taxes, leaving only $7,200. In most states, state income tax would further erode the value of the $10,000 bonus.

RELATED TERMS
  1. TARP Bonuses

    A buzzword coined by the financial media during the financial ...
  2. Golden Parachute

    Substantial benefits given to a top executive (or top executives) ...
  3. Performance-Based Compensation

    An incentive-based form of compensation that is reserved for ...
  4. Long-Term Incentive Plan - LTIP

    A reward system designed to improve employees' long-term performance ...
  5. Camouflage Compensation

    Compensation that is granted to upper echelon employees, directors, ...
  6. Stock Compensation

    A way corporations use stock options to reward employees. Stock ...
Related Articles
  1. Retirement

    Pages From The Bad CEO Playbook

    Excess compensation, golden parachutes, tunneling and IPO spinning make these bad executives even worse.
  2. Investing Basics

    Get The Most Out Of Employee Stock Options

    These plans can be lucrative for employees - if they know how to avoid unnecessary taxes.
  3. Options & Futures

    A New Approach To Equity Compensation

    The new financial accounting standard known as FAS 123R could take a bite out of your portfolio. Find out why here.
  4. Options & Futures

    A Guide To CEO Compensation

    Make sure you assess whether a CEO has a stake in doing a good job for you, the shareholder.
  5. Taxes

    An Introduction To Correcting Ineligible IRA Contributions

    Eager to save for retirement? Find out how to avoid overpayment penalties.
  6. Options & Futures

    Should Employees Be Compensated With Stock Options?

    Learn the good, the bad and the ugly sides of this type of payout.
  7. Taxes

    IRA Contributions: Eligibility And Deadlines

    Use this checklist for contribution requirements to make your payments on time.
  8. Investing

    What Tech Companies Seeking Funding Must Overcome

    Tech companies face a unique set of challenges, including a need for timely responses to changes in technology and difficulty recruiting the right talent.
  9. Economics

    Vietnam -- New Asian Hot Spot For Tech Investment

    Vietnam now has a rapidly expanding tech sector that's attracting investors from around the globe due to low business costs and highly skilled workers.
  10. Investing

    What are Preference Shares?

    Preference shares, also referred to as preferred shares, are equity shares that give the shareholders certain rights ahead of common shareholders. For instance, when the corporation declares ...

You May Also Like

Hot Definitions
  1. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  2. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  3. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  4. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  5. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  6. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
Trading Center