Annual incentive plan calculator
This annual incentive plan calculator is for AIP or STI structures where payout depends on weighted company, team, and individual performance. It is a better fit than a simple bonus calculator when the plan is scorecard-based rather than purely tied to quota.
Use this when
- Your annual incentive plan uses company and individual scorecards.
- You see terms like STI, AIP, funding factor, modifier, or weighting.
- You need a cleaner estimate than “salary × target %”.
How AIP and STI payouts usually work
Annual incentive plans often blend more than one score. A common structure is 50% company performance and 50% individual performance, but some employers use three layers: company, business unit, and individual.
| Plan feature | What it changes | What to check |
|---|---|---|
| Company multiplier | Raises or lowers the total funding pool | Can override strong individual performance. |
| Weighting split | Controls influence of each metric | Not all 100% performances matter equally. |
| Modifier | Adds a final up/down adjustment | May depend on compliance, budget, or leadership discretion. |
FAQ
Is AIP the same as STI?
Often yes in practice, although companies use different labels. Both usually refer to short-term annual incentive structures.
Why is my payout lower than my personal rating suggests?
Because many annual incentive plans include company funding or team score effects that pull the payout down.
Can AIP exceed target?
Yes. Some plans allow over-target payouts when company or individual performance beats plan.
How to pressure-test an annual incentive plan
Weights and metrics are explicit, funding logic is transparent, and the target bonus is easy to translate into payout.
Heavy discretionary language, vague modifiers, and unclear score definitions make the target bonus less meaningful.
Why annual incentive plans confuse people
Most AIP plans are not one clean multiplier. They often combine weighted scorecards, company funding, individual achievement, threshold logic, and sometimes executive discretion.
| Layer | Example | Why it matters |
|---|---|---|
| Target bonus | 15% of salary | Sets the maximum reference point for target performance. |
| Weighted metrics | 50% company, 30% team, 20% individual | Prevents any one number from telling the full story. |
| Funding / modifier | 90% company funding | Can reduce payout even when personal results were good. |
| Cap | 150% of target payout | Limits upside. |
“My target bonus is 15%, so I should get 15% if I performed well.”
“The 15% target only matters after I understand weights, score definitions, modifiers, and payout caps.”
Common AIP mistakes
AIP / STI FAQ
What is an annual incentive plan?
An annual incentive plan is a yearly bonus structure based on a set of company, team, and individual performance measures.
Is AIP the same as STI?
Often close enough for practical use. STI means short-term incentive, while AIP is a common name for the annual version of that incentive structure.
Why does my payout differ from my target bonus?
Because weighted metrics, company funding, and caps can move the final number away from the target bonus headline.