Bonus Pool Formula Clause Samples
The Bonus Pool Formula clause defines the method by which a pool of bonus funds is calculated and distributed among eligible participants. Typically, this clause outlines the metrics or performance targets that trigger the creation of the bonus pool, such as company profits or departmental achievements, and specifies how individual shares are determined, often based on factors like role, tenure, or contribution. Its core practical function is to ensure transparency and fairness in the allocation of bonuses, thereby motivating employees and aligning their interests with organizational goals.
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Bonus Pool Formula. The bonus pool is established as a percentage of pretax, pre-bonus earnings above a preset trigger point or hurdle rate. The hurdle rate for each fiscal year will be established by the Committee. Once the trigger point is reached, the bonus pool accrues at a rate set by the Committee up to 20 percent of pretax, pre-bonus income in excess of the trigger point. When a pretax, pre-bonus earnings reaches 1.4 times the trigger point, the accrual rate increases to a rate set by the Committee up to 33 percent of pretax, pre-bonus income in excess of 1.4 times the trigger point. The percentage rate used for calculating the trigger point is established each year based on economic and market conditions in effect at that time. The bonus pool formula is subject to change at any time and is determined at the sole and absolute discretion of the Committee.
Bonus Pool Formula. The Bonus Pool will equal (i) 11% of the average Pre-Tax Profit for fiscal year of the bonus calculation and the immediately prior fiscal year, multiplied by (ii) one (1) plus fifty percent (50%) of the Return on Equity for fiscal year of the bonus calculation. ________________ * The Bonus Pool Formula is subject to review and equitable adjustment by the Committee to take into account unusual items.