Signing Bonus

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.



comments powered by Disqus
Hot Definitions
  1. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and FINRA, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account.
  2. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
  3. Degree Of Financial Leverage - DFL

    A ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure. Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in earnings before interest and taxes (EBIT).
  4. Jeff Bezos

    Self-made billionaire Jeff Bezos is famous for founding online retail giant Amazon.com.
  5. Re-fracking

    Re-fracking is the practice of returning to older wells that had been fracked in the recent past to capitalize on newer, more effective extraction technology. Re-fracking can be effective on especially tight oil deposits – where the shale products low yields – to extend their productivity.
  6. TIMP (acronym)

    'TIMP' is an acronym that stands for 'Turkey, Indonesia, Mexico and Philippines.' Similar to BRIC (Brazil, Russia, India and China), the acronym was coined by and investor/economist to group fast-growing emerging market economies in similar states of economic development.
Trading Center