Sample QuarterlySemi-Annual Bonus Plans

Sample_Documents

DISCLAIMER: This is a sample template provided for informational purposes only. It does not constitute legal, tax, or financial advice. Organizations should consult their own legal and tax advisors and tailor this document to reflect their specific business needs, geographies, and applicable laws.

Document Header

Item	Details
Document Type	Quarterly/Semi-Annual Bonus Plans
Category	Variable Compensation
Company	<Company Name>
Plan Name	<Company Name> Quarterly and Semi-Annual Bonus Plan
Version	<Version Number>
Effective Date	<Effective Date>
Plan Year	<Plan Year>
Review Cycle	<Annual or Semi-Annual>
Document Owner	<Total Rewards Leader Name/Title>
Sponsors/Approvers	<Executive Sponsor>; <Compensation Committee/Board>; <HR Leader>
Last Updated	<Date>
Next Scheduled Review	<Date>

Purpose and Objectives

• Define a consistent, equitable, and market-competitive variable compensation program that rewards performance on a quarterly and semi-annual basis
• Align employee rewards with <Company Name> strategic objectives, including growth, profitability, operational excellence, and customer outcomes
• Provide clear guidance on eligibility, measures, targets, calculation methodology, administration, governance, and communication
• Support a pay-for-performance culture with transparent criteria, measurable goals, and disciplined calibration
• Ensure compliance with applicable laws in <Country> and other relevant jurisdictions, and maintain appropriate financial controls and auditability

Scope and Applicability

In Scope

• Regular employees of <Company Name> and participating subsidiaries who meet plan eligibility criteria
• Performance periods measured quarterly (Q1, Q2, Q3, Q4) and semi-annually (H1, H2)
• Roles with variable pay eligibility defined in the job architecture or pay structure
• All geographies where <Company Name> operates, subject to local law compliance and plan addenda

Out of Scope

• Commission-only roles governed by separate Sales Incentive Plans
• Long-term incentives (e.g., equity awards) governed by separate plan documents
• Contractors, interns, temporary staff, and third-party labor supplied by <Vendor Name>
• Discretionary spot bonuses outside the formal quarterly/semi-annual plan

Geographic and Entity Applicability

• Participation may vary by legal entity or country and may require localized supplements
• Where local law conflicts with this plan, local law prevails; local supplements will document deviations

Plan Design Overview

Feature	Quarterly Cycle	Semi-Annual Cycle
Performance Periods	Q1: <Date Range>; Q2: <Date Range>; Q3: <Date Range>; Q4: <Date Range>	H1: <Date Range>; H2: <Date Range>
Payout Timing	Paid in payroll within <Number> weeks after quarter close	Paid in payroll within <Number> weeks after half-year close
Measures	Company results; Business Unit/Function results; Individual performance	Company results; Business Unit/Function results; Individual performance
Weightings (typical)	Company <Percentage>–<Percentage>; BU/Function <Percentage>–<Percentage>; Individual <Percentage>–<Percentage>	Company <Percentage>–<Percentage>; BU/Function <Percentage>–<Percentage>; Individual <Percentage>–<Percentage>
Payout Range	0x to <Multiple>x target (e.g., 0% to 200%)	0x to <Multiple>x target (e.g., 0% to 200%)
Currency	Local payroll currency; conversions at <FX Source> rates	Local payroll currency; conversions at <FX Source> rates
Governance	HR/Finance prepare; Executive Leadership recommends; Committee/Board approves	HR/Finance prepare; Executive Leadership recommends; Committee/Board approves

Eligibility Criteria

• Regular full-time and part-time employees at or above <Job Level/Grade> and in eligible job families
• Employees must be active and in good standing on the payout date unless otherwise required by local law or specified in local addenda
• Minimum service requirement of <Number> days in the performance period to be eligible for payout, subject to proration rules
• Employees on performance improvement plans may be ineligible for payout at <Company Name> discretion, consistent with local law
• Eligibility lists maintained by HRIS; managers notified of changes monthly

Employment Status Events and Proration Rules

• New Hires: Prorated from start date within the performance period
• Promotions: Apply old target through effective date; new target thereafter; blended prorated calculation
• Lateral Transfers: Maintain plan eligibility; weightings and KPIs adjust prospectively; proration applies based on effective date
• Leaves of Absence: Paid/unpaid leave handled per local policy; proration based on eligible, worked, or paid time; protected leaves treated per law
• Terminations: Voluntary resignations generally forfeit payout unless required by local law; involuntary without cause may be eligible for prorated payout; terminations for cause are ineligible
• Retirement: May be eligible for prorated payout subject to approval and local policy
• Death or Disability: Prorated payout to estate or employee per policy and law
• M&A/Restructuring: Handled via integration guidelines; proration, mapping of KPIs, and eligibility confirmed at close

Award Opportunities and Targets

• Target bonus opportunity is expressed as a percentage of base salary or as a fixed target amount
• Target setting aligns with internal job architecture, market benchmarks, and budgeted affordability

Job Group/Level	Target Bonus Opportunity (as % of base salary)
Executives (e.g., <Levels>)	<Percentage>–<Percentage> (e.g., 30%–60%)
Directors	<Percentage>–<Percentage> (e.g., 20%–35%)
Managers	<Percentage>–<Percentage> (e.g., 10%–20%)
Professionals/Specialists	<Percentage>–<Percentage> (e.g., 5%–15%)
Hourly/Operations (eligible roles)	<Percentage>–<Percentage> (e.g., 3%–10%)

Performance Measures and Weightings

• Measures are selected annually and may vary by function to reflect value creation drivers
• Use a balanced scorecard approach for risk-adjusted performance and sustainability

Measure Category	Example KPIs	Typical Weighting (Quarterly)	Typical Weighting (Semi-Annual)
Company Results	Revenue, EBITDA, Operating Income, Free Cash Flow, Safety, NPS	<Percentage>–<Percentage> (e.g., 30%–50%)	<Percentage>–<Percentage> (e.g., 40%–60%)
BU/Function Results	Cost per Unit, On-Time Delivery, Quality, Bookings, Backlog, Project Milestones	<Percentage>–<Percentage> (e.g., 30%–50%)	<Percentage>–<Percentage> (e.g., 20%–40%)
Individual/People	Goal attainment, competencies, leadership behaviors, compliance	<Percentage> (e.g., 20%)	<Percentage> (e.g., 20%)

Company Results

• KPIs are defined by Finance and approved by the <Compensation Committee/Board>
• Targets include threshold, target, and maximum levels
• Payout curve typically uses linear interpolation between points

Business Unit/Function Results

• KPI selection is relevant to each BU/function and cascades from the enterprise plan
• Milestones must be measurable and auditable, with clear owners and data sources
• Where BU results are not applicable, apply enterprise results or approved proxy measures

Individual Performance Modifier

• Individual performance assessed via the year-to-date check-in cycle and standardized ratings
• Individual modifier typically ranges from 0.8x to 1.2x, with 1.0x for solid performance; modifiers outside this range require HR approval
• Use of individual modifier must be supported by documented goals and feedback

Payout Curves, Thresholds, and Caps

• Minimum performance threshold required for each KPI for any payout (e.g., 90% of target)
• Target performance yields 1.0x payout factor; maximum performance yields up to <Multiple>x (e.g., 2.0x)
• Negative discretion may be applied for risk, quality, safety, compliance, or customer impact concerns
• Positive discretion is limited and requires <Executive Sponsor> and <Compensation Committee> approval with documented rationale

Plan Funding and Pool Governance

• Funding based on Company Score aggregated from weighted KPI results and affordability gates (e.g., minimum operating income)
• BU/function pools funded by applying BU Score to eligible base payroll and targets
• Finance validates results using approved data sources; Internal Audit may review sampling
• Unused funds revert to company; no plan creates a trust or segregated fund

Calculation Methodology and Examples

Standard Formula

• Quarterly or semi-annual bonus payout is calculated as:
• Bonus Payout = Eligible Earnings x Target Bonus % x Company Factor x BU/Function Factor x Individual Modifier x Proration
• Eligible Earnings typically include base salary paid during the performance period; exclusions include sign-on bonuses, overtime, and allowances unless defined otherwise

Calculation Notes

• If a KPI is not measurable for a period due to extraordinary events, the <Compensation Committee> may adjust or substitute measures with documented rationale
• Factors are rounded to two decimal places; final payout rounded to nearest <Currency Rule> (e.g., whole unit)

Quarterly Example (Illustrative)

• Employee: <Employee Name>, Manager, BU: <BU Name>, Country: <Country>
• Base Salary: <Amount> annually; Q2 Eligible Earnings: <Amount> (e.g., 15,000)
• Target Bonus %: 12%
• Weightings: Company 40%, BU 40%, Individual 20%
• Results:
  • Company KPI scorecard yields 105% of target; Company Factor = 1.05
  • BU KPI scorecard yields 90% of target; BU Factor = 0.90
  • Individual performance rating = Meets; Individual Modifier = 1.00
• Proration: Hired on <Date> within Q2 and eligible for full quarter; Proration = 1.00
• Payout:
  • Eligible Earnings x Target % = 15,000 x 0.12 = 1,800
  • Apply factors: 1,800 x 1.05 x 0.90 x 1.00 = 1,701
  • Rounded payout: <Amount> (e.g., 1,701)

Semi-Annual Example (Illustrative)

• Employee: <Employee Name>, Director, BU: <BU Name>, Country: <Country>
• H1 Eligible Earnings: <Amount> (e.g., 80,000 annually; 40,000 in H1)
• Target Bonus %: 20%
• Factors:
  • Company Factor: 0.95
  • BU Factor: 1.20
  • Individual Modifier: 1.10
• Promotion on <Date> within H1 from Manager (15%) to Director (20%); Earnings split: 25,000 at 15%, 15,000 at 20%
• Payout:
  • Portion A: 25,000 x 0.15 = 3,750
  • Portion B: 15,000 x 0.20 = 3,000
  • Subtotal target = 6,750
  • Apply factors: 6,750 x 0.95 x 1.20 x 1.10 = 8,463
  • Rounded payout: <Amount> (e.g., 8,463)

Currency, Exchange Rates, and Cross-Border Rules

• Payouts are made in local payroll currency; cross-border assignees follow <Global Mobility Policy>
• FX conversions use <FX Source> average monthly rate for the performance period unless otherwise approved
• Any currency gains/losses are not guaranteed and are not grossed up unless required by law

Performance Management Integration

Goal Setting

• Goals must be SMART, documented in <HCM System Name> by <Date> each period
• Mid-period check-ins required by <Date> with status updates on KPIs

Calibration and Ratings

• Calibration sessions held after period close to ensure equity in individual modifiers
• Distribution guidance may apply at <Company Name> discretion; forced distribution is not required unless local law allows and policy specifies

Data Sources and Validation

• Financial measures: validated by Finance from <System of Record>
• Operational measures: validated by BU Operations from <Data Warehouse/BI Tool>
• People measures: validated by HR from <HCM System Name>
• All calculations stored and auditable for <Number> years per retention schedule

Employment Events and Special Cases

New Hires

• Eligibility begins on the first day of the pay period following hire unless otherwise stated
• Proration based on eligible days within the performance period

Promotions and Role Changes

• Apply split-target methodology across effective dates; document in the calculation workbook
• Where role change includes plan eligibility change, pro-rate by days in each plan

Transfers Across BUs or Countries

• BU Factor applies pro-rata by time in each BU; cross-country transfers follow local law for payout eligibility
• FX conversion approach documented for transfers between currencies

Leaves of Absence

• Paid leave counts as eligible earnings unless policy states otherwise
• Unpaid leave prorated by time away; protected leaves treated per local law and policy

Terminations

• Involuntary without cause: prorated payout subject to approval and release agreements where applicable
• Voluntary: forfeiture unless required by law or local addendum
• For cause: no payout; any overpayments recoverable subject to law

Death or Disability

• Prorated payout paid to estate or employee based on certified status and policy

Mergers, Acquisitions, and Divestitures

• Eligibility and measures harmonized as soon as practicable; bridging arrangements may apply
• Closing-date prorations use calendar-day method unless otherwise approved

Administration and Operations

Annual and Periodic Calendar

1. Q1/H1 goal setting completed by <Date>; systems configured by <Date>
2. Period close at <Date>; data freeze <Number> business days after close
3. Finance delivers preliminary KPI results by <Date>
4. HR comp team runs calculations by <Date> and distributes manager statements
5. Calibration sessions and exception process completed by <Date>
6. Executive review and Committee approval by <Date>
7. Payroll funding file delivered to <Payroll> by <Date>
8. Payout communicated and paid by <Date>
9. Post-mortem and lessons learned by <Date>

Systems and Tools

• Calculation engine: <System/Tool Name> with audit trails and role-based access
• Data integration: secure feeds from <HRIS>, <Finance System>, and <Data Warehouse>
• Manager dashboards and employee statements generated via <Reporting Tool>

Payroll, Tax, and Withholding

• Bonuses are supplemental wages and taxed per <Country> rules; supplemental withholding rates may apply
• Deductions (e.g., garnishments) apply per law; net pay delivered per payroll calendar
• Social insurance and benefits interactions handled per local law and plan documents

Accounting, Accruals, and Controls

• Accruals recorded monthly using best estimate of payouts; Finance owns assumptions
• Variances analyzed each close; material changes communicated to <Executive Sponsor>
• Segregation of duties enforced: data prep, calculation, approval, and payroll upload separated

Overpayments and Corrections

• Errors corrected in the next payroll where feasible; overpayments are recoverable to the extent permitted by law
• Audit log maintained for adjustments with approver, date, and rationale

Data Privacy and Security

• Personal data processed under <Privacy Policy> and applicable data protection laws
• Access limited to need-to-know basis; data retained for <Number> years

Roles and Responsibilities

• Board/<Compensation Committee>: Approves plan design, measures, and final funding
• CEO/Executive Leadership: Recommends measures, sets tone for performance culture
• Finance: Defines financial KPIs, validates results, manages accruals
• HR Total Rewards: Designs plan, administers calculations, maintains governance
• HR Business Partners: Coach managers on goal setting and ratings; ensure consistency
• Managers: Set and assess goals, communicate outcomes, ensure documentation
• Internal Audit/Compliance: Reviews controls, ensures adherence to policy
• Payroll: Processes payouts, applies withholding and deductions
• Legal: Reviews for compliance, drafts local addenda and clawback language
• Employees: Understand goals, track progress, and engage in performance discussions

Implementation Guidelines

Readiness and Setup

1. Confirm plan eligibility lists and mapping of employees to BUs and job levels
2. Configure KPIs, targets, thresholds, and caps in <System/Tool Name>
3. Load target bonus % by employee; validate against job architecture
4. Establish data feeds and reconciliation routines; perform parallel test with prior period data
5. Publish manager guide and employee FAQs; train managers on calibration and ratings
6. Set up approval workflows and exception processes; define SLAs

In-Period Management

1. Monitor KPI performance monthly using dashboards; address data quality issues
2. Conduct mid-period check-ins; document progress and risks
3. Identify employment events and apply proration flags in HRIS

Close and Payout Cycle

1. Freeze data; produce preliminary calculations and exception logs
2. Convene calibration sessions; apply approved individual modifiers
3. Prepare executive summary and funding recommendation for approval
4. Generate employee statements; queue payroll files after approval
5. Conduct post-payment audit; document findings and improvements

Review and Approval Process

1. HR and Finance conduct an annual plan review by <Date> to refresh measures, weightings, and targets
2. Proposed changes summarized in a redline and an executive briefing memo
3. Legal reviews proposed changes for compliance and alignment with local addenda
4. Executive Leadership endorses changes and submits to <Compensation Committee/Board>
5. Committee/Board approves plan and any in-year adjustments subject to affordability
6. HR publishes the updated plan and communicates changes before the new period starts

Governance, Risk, and Controls

• Use control checklists for each cycle: data freeze, calculation validation, approval evidence, payroll confirmation
• Maintain an exceptions log for any discretionary adjustments with rationale and approver
• Implement preventative and detective controls in <System/Tool Name> including access controls and change logs
• Conduct annual independent review by Internal Audit or an external advisor
• Establish whistleblower and ethics channels for reporting concerns related to incentive manipulation

Legal Notices and Disclaimers

• This plan does not create a contract of employment and does not alter the at-will employment relationship where at-will employment is recognized by law
• <Company Name> reserves the right to amend, suspend, or terminate the plan at any time, with or without notice, subject to applicable laws and approvals
• Payouts are subject to all applicable taxes, social charges, and withholdings
• Participation is not a guarantee of any payment; payouts are contingent on company performance, budget, approval, and continued employment as required by local law
• Clawback: Payouts may be recovered in cases of misconduct, material misstatement of financials, breach of restrictive covenants, or other circumstances as permitted by law and company policy
• In the event of conflict between this document and a local addendum, the local addendum controls to the extent required by law
• If any provision is found unenforceable, the remainder of the plan remains in force

Examples of KPI Definitions and Payout Curves

KPI Definitions (Illustrative)

KPI	Definition	Data Source	Threshold/Target/Max
Revenue	GAAP revenue recognized in the period excluding <Adjustments>	<Finance System>	95% / 100% / 110%
EBITDA	Operating EBITDA excluding <One-Time Items>	<Finance System>	90% / 100% / 115%
On-Time Delivery	Shipments delivered on or before promise date	<Operations System>	92% / 96% / 99%
Safety (TRIR)	Total recordable incident rate per 200k hours	<EHS System>	0.80 / 0.60 / 0.40
NPS	Net Promoter Score based on <Survey Vendor>	<Vendor Name>	40 / 50 / 60

Payout Curve Method (Illustrative)

• Linear interpolation between threshold and target, and between target and maximum
• Example: KPI weight 40%; result of 103% of target leads to a factor of 1.15 on that KPI if slope between 100% and 110% corresponds to 1.0x to 1.5x
• Floor at 0x below threshold; cap at <Multiple>x at or above max

Local Addenda and Variations

• Local addenda document variations required by law or market practice (e.g., inclusion of allowances in eligible earnings, legally required payout upon termination, thirteenth-month interactions)
• Addenda approved by Legal and HR; translations provided where required

Documentation and Record Retention

• Maintain copies of plan documents, approvals, calculation files, and communications for <Number> years
• Store in <Document Repository> with access controls and version history
• Archive superseded versions with clear effective dates

Audit Checklist (Sample)

1. Confirm eligibility list at period start and end
2. Reconcile eligible earnings to payroll reports
3. Verify KPI results to source systems and Finance attestation
4. Validate calculation formulas and sample transactions
5. Confirm approvals recorded for discretionary changes
6. Match payroll payment file to approved payout register
7. Retain audit evidence and sign-offs

Glossary of Terms

Term	Definition
Eligible Earnings	Base salary paid during the performance period, excluding items not defined as eligible by policy or local addenda
Target Bonus %	The percentage of base salary that represents the target bonus opportunity for a role or employee
Company Factor	The payout factor derived from company-level KPIs for the performance period
BU/Function Factor	The payout factor derived from business unit or functional KPIs for the performance period
Individual Modifier	The factor applied based on the employee’s assessed performance relative to goals and behaviors
Threshold	The minimum performance level at which a KPI begins to pay out (factor greater than zero)
Maximum	The performance level at which a KPI pays at the capped maximum factor
Proration	The adjustment applied to reflect partial participation during the period
Calibration	The process of reviewing and aligning performance assessments across teams to ensure fairness
Clawback	Company’s right to require repayment of incentives under specified circumstances
Affordability Gate	A financial safeguard (e.g., minimum operating income) required before payouts are released

Communication to Employees and Managers

Welcome to the <Company Name> Quarterly and Semi-Annual Bonus Plan. This plan is designed to recognize your contributions in a timely and meaningful way by connecting the results you help deliver with a bonus payout aligned to company and team performance.

Here is how the plan works in simple terms:

• Each quarter and half-year, we set specific goals for <Company Name> and for each business unit or function. These goals are measurable and tied to key outcomes like growth, profitability, quality, safety, and customer experience.
• You have a target bonus expressed as a percentage of your base pay. Hitting targets means earning 100% of your target bonus for that period, before any individual performance adjustment.
• After the period ends, we measure results and calculate a payout factor for the company and, where relevant, for your business unit or function. Stronger results mean higher factors, up to a cap.
• Your manager also reviews your goals and contributions. This results in an individual modifier, typically between 0.8x and 1.2x, which can slightly reduce or increase your payout based on your impact and behavior.
• We multiply these pieces together to determine your payout. If you joined mid-period, changed roles, or were on leave, a proration may apply.

What you can expect each period:

1. Clear goals at the start of the period, visible in <HCM System Name>
2. A mid-period check-in to discuss progress and support
3. Transparent results after period close, including how the company and your team performed
4. A personalized statement showing your calculation, approved by leadership
5. Payment in your regular payroll within <Number> weeks of the period closing

Your role in making this successful:

• Know your goals and track your progress. If something changes, work with your manager to update your goals.
• Focus on what matters most. The plan rewards quality results that are achieved the right way.
• Ask questions. If you are unsure how your bonus is calculated, reach out to your manager or HR.
• Live our values. Safety, integrity, compliance, and customer trust are essential. Even when numbers look good, we consider how results were achieved.

Examples to bring it to life:

• If your quarterly target is 10% and your eligible earnings for the quarter are <Amount>, your target bonus would be <Amount>. If the company factor is 1.05, your team factor is 0.95, and your individual modifier is 1.10, your payout would be slightly above target.
• If results fall below the minimum threshold, the payout for that measure is zero. This means we are serious about setting meaningful goals and paying for actual outcomes.

A few reminders:

• Bonuses are not guaranteed. Payouts depend on results, budget, and required approvals.
• The plan may be updated to keep it aligned with our strategy and market. We will communicate changes in advance whenever possible.
• Taxes and withholdings apply and are handled through payroll according to local rules.

Where to go for help:

• Review the plan summary and FAQs on <Intranet Site>
• Contact HR at <HR Contact Email> for questions about eligibility, calculations, or employment events
• Speak with your manager about your goals, performance, and how you can maximize your impact this period

Thank you for your contributions to <Company Name>. This plan is one way we recognize the results you help achieve for our customers, our team, and our company.

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Document Information:

• Document Type: Quarterly/Semi-Annual Bonus Plans
• Category: Variable Compensation
• Generated: August 24, 2025
• Status: Sample Template
• Next Review: <Insert Review Date>

Usage Instructions:

1. Replace all text in angle brackets < > with your company-specific information
2. Review all sections for applicability to your organization
3. Customize content to reflect your company's policies and local regulations
4. Have legal and HR leadership review before implementation
5. Update document header with your company's version control information
6. At bottom of the document you find a short example on how the content could be communicated to end-users, for instance employees.

This sample document is provided for reference only and should be customized to meet your organization's specific needs and local legal requirements.