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Definition

Annual Bonus

Definition (1):

Annual bonus refers to plans that are designed to motivate the short-term performance of managers and are tied to company profitability. It also means employees’ motivational short-term performance rewards for fulfilling their responsibilities and for delivering superior results.

Short-term bonuses may easily result in minus or plus adjustments of 25% or more to total pay. Three factors influence one’s bonus: eligibility, fund size, and individual performance.

Definition (2):

According to Economic Research Institute Inc.,” Usually a lump-sum payment (cash, shares, etc.) made once a year in addition to an employee's normal salary or wage for a fiscal or calendar year.”

Definition (3):

Annual Bonus refers to any compensation paid in addition to base annual salary associated with services conducted during any calendar year which is payable to an employee under an employer’s yearly bonus and cash incentive plans, where stock options are not included.

Use of the term in Sentences:

  • This year, the company is planning to delay the payment of the annual bonus to the employees because of a financial crisis due to this pandemic situation.
  • The employees have applied to the company’s chairman to get their annual bonus on time.
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