I've recently gotten a job with a company that offers a yearly bonus, however I'm not understanding in the contract how the bonus is calculated. It states :
Bonus Opportunity: $1,875 (pro-rated based on start date)
The bonus has four components:
- Profitability of the firm*
- Profitability of the Team*
- Personal Utilization
- Individuals objectives/goals (SMART – Specific, Measurable, Agreed upon, Realistic, Timely)
Each year the profitability goal of the firm and the Team will be set, as well as the personal
utilization goal, to align with the company’s strategy.
This is my first time working for a place that offers a year end bonus so I honestly don't understand how it is my year end bonus will be calculated.
Current Year Targets
Profitability of the firm 27% of net revenue 33%
Profitability of the BI Team 18% of net revenue** 33%
Personal Utilization 75% average 33%
Objectives/Goals
1. Knowledge Sharing 30% Factor
2. Administrative Tasks
They provide an example if it helps with clarification
The bonus opportunity of the profitability targets increase by 5% for each percentage point that the target is exceeded by.
Example: Profitability of the Team comes in at 7% - the bonus opportunity of that target goes from $5,000 to $5,500 .
The bonus opportunity of the utilization target increases by 2.5% for each percentage point that the target is exceeded by.
Example: Utilization is 85% - the bonus opportunity goes from $5,000 to $6,250.
There is no cap to the bonus upside.
I apologize if this is off topic but I'm fairly certain based on the guidelines that it is in fact on topic. To my understanding (I could be completely off) the maximum bonus I can receive for this year is $1,875 based off the Bonus Opportunity.
4.5/12 * 5000 = 1,875
. So reversed it would bebonus = 1,875 / (months/12)
. The other factors are incentive goals that will increase (or decrease) the amount of bonus you get. – D Stanley Jun 22 '17 at 15:45