Legal Definitions - bonus

A bonus is an additional payment or benefit provided beyond what is typically expected or contractually obligated. It serves as an incentive, a reward for exceptional performance, or a special consideration to secure an agreement. Unlike regular compensation, a bonus is often contingent on specific conditions being met or is offered as an extra inducement.

• Example 1 (Performance Incentive): A technology company sets a goal for its software development team to launch a new product feature by a specific date. If the team successfully delivers the feature on time and bug-free, each member receives a $2,000 bonus in addition to their regular salary.

  Explanation: This illustrates a bonus as an extra payment given for achieving a predefined, challenging goal that goes beyond the team's standard job duties, acting as an incentive for high performance.

• Example 2 (Contractual Inducement): When a professional athlete signs a new contract with a sports team, the contract includes a $1 million signing bonus, paid upfront, in addition to their multi-year salary.

  Explanation: Here, the bonus is an extra payment offered as an inducement to secure the athlete's commitment to sign the contract, separate from their regular compensation for playing.

• Example 3 (Client Retention): A marketing agency offers its account managers a 5% bonus on the annual contract value for any client they successfully retain for a third consecutive year.

  Explanation: This demonstrates a bonus as an additional reward for achieving a specific business objective (client retention) that adds value to the company, beyond the account manager's standard salary or commission for managing the account.