What is "Annual Bonus" meaning?

An annual bonus is a lump-sum payment typically awarded at the end of a financial year. It serves as a financial incentive tied to employee performance, company profits, or achievement of departmental goals. Bonuses are common in corporate roles, sales, and executive compensation packages.

Example

At the year-end company meeting, the CEO announced that all eligible staff would receive an annual bonus based on the company’s strong quarterly growth.

How is "Annual Bonus" used in business?

In business, annual bonuses are used to motivate employees, retain top talent, and align team performance with company goals. They are often outlined in employment contracts and vary by role, seniority, and company profitability.

Pro Tip

When negotiating a job offer, don’t overlook the annual bonus—it's often a significant part of total compensation and may be tied to both personal and company success.

Related Terms

Incentive Plan, Performance Bonus, Profit Sharing, Total Compensation