Guide
Annual bonus: how it works
Annual bonuses are usually expressed as one number or percentage, but most plans also include business performance multipliers, individual ratings, eligibility rules, and proration.
Annual bonus = target bonus × company factor × individual factor × proration factor
| Adjustment | What it means | Why it matters |
|---|---|---|
| Company factor | Business performance multiplier | Strong individual performance may not fully pay if company results are weak. |
| Individual factor | Performance rating multiplier | Personal review outcome affects payout. |
| Proration | Partial-year adjustment | New joiners and role changes often reduce the bonus. |