Performance Bonus
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A variable payment awarded to an employee based on meeting or exceeding predefined performance targets, such as individual KPIs, team goals, or company financial results.
## Performance Bonus
A performance bonus directly links pay to results. It incentivizes employees to achieve specific targets and rewards exceptional contributions.
### Structures
- **Individual**: Based on personal KPIs (sales quota, project delivery, quality scores).
- **Team**: Based on departmental or team objectives.
- **Company-wide**: Tied to revenue, profit, or EBITDA targets.
- **Hybrid**: A combination of individual, team, and company metrics.
### Typical Ranges
Performance bonuses typically range from 5% to 30% of base salary for non-executive roles. Executive bonuses can reach 50–200% of base salary. In banking, variable compensation can exceed base salary by multiples.
### Regional Considerations
- **EU**: The CRD V directive caps banker bonuses at 100% of salary (200% with shareholder approval).
- **Japan**: Year-end bonuses averaging 2–3 months' salary are culturally expected.
- **US**: No regulatory cap; bonus percentages are set by each company's compensation committee.