Bonus Pool Allocation Calculator

Work out bonus pool allocation instantly with clear inputs, formula shown and shareable results.

About Bonus Pool Allocation Calculator

Most annual bonus schemes multiply a target bonus percentage by a company performance factor and an individual rating factor. The multiplicative design means a weak company year suppresses even outstanding individual performance, which is deliberate but frequently misunderstood.

Formulas

Target bonus

Target = Salary x Target bonus %

Payout

Payout = Target x Company multiplier x Individual multiplier

Worked example

With the default values below, Bonus Pool Allocation Calculator returns Bonus payout of $236,250.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Employee salary: 1,400,000
Target bonus as % of salary: 15
Company performance multiplier: 0.9
Individual rating multiplier: 1.25

Results

Bonus payout: $236,250.00
Target bonus at 100%: $210,000.00
Payout as % of target: 112.50%
Effective bonus as % of salary: 16.88%

Step by step

1Values used
2Target bonus
3Payout
4Bonus payout= 236,250.00
5Target bonus at 100%= 210,000.00
6Payout as % of target= 112.50
7Effective bonus as % of salary= 16.88

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Why multiply rather than average the two factors?

To align individual reward with company outcome. Averaging would pay substantial bonuses in a loss-making year, which most boards will not fund.

Is the pool capped?

Almost always. The sum of individual payouts must fit the funded pool, which is why individual multipliers are usually calibrated after ratings are collected.