Compensation Trend: Semiannual Bonuses

Many U.S. companies, particularly those in the retail and high-tech industries, are replacing their annual incentive structure with semiannual bonuses, The Wall Street Journal reports.  Changing to a semiannual bonus structure is intended to help retain key employees, decrease turnover, and increase morale as the economic climate has led some companies to cancel 401(k) contributions, freeze pay or cut salaries.

Those who argue against the wisdom of semiannual bonuses contend that under this structure employees are rewarded for short-term achievements that might not produce long-term results.  However, business leaders who have instituted semiannual bonuses argue that shortened performance periods allow them to set more realistic goals for their employees.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.