How to Calculate a STIP Bonus
Use this guide when you need the formula behind a STIP or STI plan before using the calculator.
Last reviewed 20 August 2026
STIP formula
The exact plan may use different weights, but the practical structure is target value adjusted by performance factors.
Weighted scorecard example
| Metric | Weight | Score | Weighted result |
|---|---|---|---|
| Company performance | 50% | 110% | 55% |
| Team performance | 25% | 100% | 25% |
| Individual performance | 25% | 90% | 22.5% |
Total weighted performance is 102.5 percent before caps or eligibility.
Common reasons the payout changes
Related tools and next steps
The five steps, in order
Two worked examples
Above target. $90,000 salary, 15% target, company 110%, team 95%, individual 100%, full eligibility.
13,500 × 1.10 × 0.95 × 1.00 = $14,107, which is 104% of target and well under the 200% cap ($27,000). Educational gross estimate only.
Below threshold. Same salary and target, but company results land at 85% of plan against a 90% funding threshold.
The gate is not cleared, so the pool is unfunded and no individual score can rescue the payout. This is the single most common reason a STIP pays nothing in a year where individual performance was strong.
Run your own numbers in the STIP calculator, or read what a STIP bonus is for the full definition.
STIP calculation questions
Is STIP taxable?
Most cash bonus payments are normally treated as taxable compensation, but payroll treatment depends on jurisdiction and employer process.
Is STIP guaranteed?
Usually no. STIP payouts often depend on company, team and individual performance plus plan eligibility.
How do you calculate a STIP bonus?
Salary times the target bonus percentage gives the target payout. Multiply that by the company, team and individual performance factors, scale for eligibility if you did not work the full period, and apply the cap last against the prorated target.
What is the STIP formula?
STIP = salary x target % x company factor x team factor x individual factor x eligibility, then capped at typically 150-200% of the prorated target.
Why did my STIP pay nothing?
Most often because company results fell below the plan funding threshold, which zeroes the pool regardless of individual performance. Other causes are a zero individual rating, failing an eligibility condition, or leaving before the payment date.
Is the cap applied before or after proration?
After. The cap is the last step and applies to the prorated target, so someone eligible for three quarters of the year cannot earn the full-year maximum.
What is a typical STIP target percentage?
Around 5-15% of salary for individual contributors, 10-20% for managers, 20-40% for directors and 50%+ for executives, though it depends entirely on the plan and the employer.
Reviewed 20 August 2026 by the BonusPayCalc editorial team. Gross planning estimates only — not payroll, tax, legal or HR advice. See methodology for how formulas are chosen, or report a correction.