Discretionary Bonus

A discretionary bonus is a financial incentive that is provided by an employer to employees who meet or exceed certain predetermined performance targets or goals. Unlike a mandatory bonus, discretionary bonuses are not part of an employee's standard compensation and are not guaranteed. The amount and timing of a discretionary bonus are entirely at the employer's discretion.

Discretionary bonuses are often awarded as a means of recognizing exceptional performance, motivation, and dedication on the part of employees. They are often used to reward employees who go above and beyond the call of duty, take initiative, or achieve exceptional results.

In general, discretionary bonuses are not announcement schemes, which means that employees do not know in advance whether they will receive a bonus or what its amount will be. The employer may communicate the criteria for earning a discretionary bonus, but the details of the bonus itself are usually kept confidential until it is awarded.

Discretionary bonuses may be financial in nature or may take the form of other incentives, such as time off or additional benefits. Many companies use discretion in determining the number of discretionary bonuses, allowing performance or achievement to determine the success of such awarding.