I'm currently pursuing for a job. My original asking annual salary was $120,000. The company presented to me with a offer, but they want to only pay me $102,000 for my annual salary and pay me $4,500 as bonus each quarter. Ultimately, my total annual compensation would be the same as the salary that I originally was asking for. But I don't understand why they are choosing to pay portion of my asking salary as bonus, rather than just include it in my regular salary?
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9First of all, $4000 x 4 quarters = 16,000. 16,000 + 102,000 = 118,000 which is less than what you originally asked for. Secondly, "bonuses" are usually conditional on some sort of performance metric, so it seems to me like they're avoiding agreeing to your requested amount in contract so they can stiff you on at least a portion of the "bonus" for whatever reasons they come up with later. If you really have your heart set on $120,000 salary, I'd keep looking.– Steve-OMay 14, 2017 at 2:36
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1Is that bonus guaranteed, or is it contingent on some factor? It could be an accounting trick to give you the money you are looking for while balancing their books in some way, or they could be just trying to offer you less money. Whatever it is, make sure you get it in writing.– Seth RMay 14, 2017 at 2:56
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1Company may have internal salary brackets for the position you are applying for and this is a workaround for those brackets. There may also be conditions for the bonus (e.g. job performance). And something to consider is that annual raises may not apply to the bonus part so it gets chipped away by inflation over time– JarkkoLMay 14, 2017 at 4:08
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Sorry, I made a typo in my original question. They are actually paying $4500 in bonus per quarter. So total bonus would be $18,000 per year. $18,000 bonus + $102,000 salary = $120,000 total compensation.– jaylynn7May 14, 2017 at 12:18
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1 Answer
But I don't understand why they are choosing to pay portion of my asking salary as bonus, rather than just include it in my regular salary?
It depends. Check the offer carefully.
Some bonuses are guaranteed. The company accounting department may wish to have it paid out in quarters for financial reasons.
Some bonuses are guaranteed for the first year only. The second year you may get no bonus or the bonus amount may change depending on your performance or the company's performance.
Some bonuses are variable. In that case, your actual bonus attainment may depend on your performance and/or the performance of the company - often using a complicated formula.
I worked for such a company. Our "target bonus" amount was a percentage of our salary (for most, 15%) but was affected by individual performance, business unit performance, and company performance. Some years, even the best performers got little in the way of a bonus, since the company itself had a poor year. Other years, everyone received more than 100% of their target bonus due to the outstanding performance of the overall company. It's virtually impossible to determine the expected bonus payout ahead of time in these cases.
In general, companies tend not to ever reduce salaries. But bonus plans (like all benefits) are subject to change every year. You can pretty much depend on getting your salary. But you may or may not receive the bonuses over time. So the company would prefer to commit as little as possible to fixed overhead (salary) and have the remainder committed to variable overhead (bonuses) that is more easily under their control.
answered May 14, 2017 at 11:27
