Bonus
Additional compensation paid to employees beyond their regular salary, typically based on performance or achievements.
Definition
A bonus is extra compensation paid to employees in addition to their base salary. Bonuses can be tied to individual performance, company performance, or specific achievements. In startups, bonuses are often used to attract talent when equity and cash are limited.
Types of Bonuses
Performance Bonus
Based on meeting specific goals or targets
Signing Bonus
One-time payment for joining the company
Retention Bonus
Incentive to stay with the company
Real-World Example
Sales Performance Bonus: 10% of annual salary for exceeding quota by 20%
A sales rep with $100K base salary who exceeds their quota by 20% receives a $10K performance bonus.