Life in Balance: Amit D. Chaudhary’s Blog
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Regular kind of Bonuses

The Regular kind of Bonuses are typically 5-30% of the annual salary  and given as part of an employee’s annual performance review. These are quite an important component of Compensation package at most Computer Companies including Brocade, Microsoft, Yahoo, Amazon, and so. My thoughts:

• These make sense from the point of view of the company, the same employee will perform differently during their career, many times this is due to temporary circumstances including a new hobby (Car racing, Bikes, Flying, etc), Personal life changes (Marriage, Children, Illness, etc) or simple variations in motivations. Bonuses allow a company to reward them accordingly.
• From an employee’s point of view, it makes sense too as part of the Bonus comes from the company meeting it’s financial objectives, thereby increasing them during good times. A counter point is to give more weight to the Salary component of the Compensation to ensure you are sufficiently paid during the down times due to industry changes, an off quarter or mis-execution at higher levels.

Extremely High kind of Bonuses

The Extremely High kind of Bonuses, in my knowledge, are\were only given at Google in form of Founder awards, these are\were rumored to be $1million+ which makes them 1000% of a typical software developer’s annual salary and were given to high impact projects including Gmail, Google Desktop, Google IPO, etc. My thoughts:

• It made sense from Google’s point of view, from what I know, the whole company is kind of many startups running inside a large company. Engineers can go and join any group (Search for “switch teams” in Steve Yegge’s article: Good Agile, Bad Agile), so it comes to being very good and being in the right startup, err group to be successful.
• I won’t be surprised if Google still continues the Founders awards, only they are super secret now.

More views on the Incentives topic:

1. Marc Andreessen, one of creators of Mozilla and Netscape browsers writes in The Pmarca Guide to Big Companies, part 2: Retaining great people

Don’t do arbitrary large spot bonuses or restricted stock grants to try to give a small number of people huge financial upside.

An example is the Google Founders’ Awards program, which Google has largely stopped, and which didn’t work anyway.

It sounds like a great idea at the time, but it causes a severe backlash among both the normal people who don’t get it (who feel like they’re the B team) and the great people who don’t get it (who feel like they’ve been screwed).

I agree that the situation in the last statement might happen, but do not believe it is a reason not to do it. It is no different from one person being successful with a startup versus another one not being.

2. Joel Spolsky’s view point: Incentive Pay Considered Harmful

if you do have any choice in the matter, I’d recommend that you run fleeing from any kind of performance review, incentive bonus, or stupid corporate employee-of-the-month program.