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In reply to the discussion: Pic Of The Moment: Romney Pays Top Staff $200,000 In Bonuses [View all]unblock
(52,206 posts)generally wall street has billed the annual bonuses as backward-looking; if the company, your business unit, and you do great then you get a big fat bonus, less so otherwise. but the reality is that bonuses are used by management to keep the people they want to keep and get rid of the people they want to get rid of. so really, they're forward-looking.
i found this out the hard way when i had a great first half of a year and then got into a car accident (actually i was a passenger in a cab on the way home from a late night *at work*). i still made some great contributions in the second half, but all my boss's boss saw was me out for physical therapy a lot. notwithstanding that i was nearly all better by bonus time, management thought there was a big disconnect between my performance over the year and my likely performance in the future. so the bonus i got was about one third of what it should have been (i know this for a fact because i had discussions with my then-boss after we both had left that company).
in any event, bonuses could be done as profit-sharing, but that would HAVE to be backward-looking. they do it as labor income so that they can use their judgement, i.e., screw people like me.