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while many companies provide monetary ( cash) bonuses, a bonus can take other forms. in this article, we take a comprehensive look at how bonuses work by defining what they are and listing 12 of the most common types of bonuses. however, it’ s best not to repeat the mistakes of clark griswold’ s boss in. a bonus is a financial compensation that is above and beyond the normal payment expectations of its recipient. it’ s typically based on performance, company profits, or other criteria and is. you may get a bonus one year but nothing the next, so be sure you understand how your employer selects people to receive a year- end bonus. the most common type of bonus is given annually based on an employee’ s annual base salary. what are bonuses? it is extra money that an employer gives to an employee in addition to their regular salary or wages. an employee bonus is pay awarded to an employee in addition to their regular salary or pay rate. bonuses are supplementary to the agreed- upon hourly rate or annual salary an employee bonus earns. bonus pay is a type of supplemental pay. in most cases, employees earn bonus pay as an award for excellent work or as an end- of- year reward. bonuses may be awarded by a company as an incentive or to reward good performance. each company’ s bonus structure depends on the size and net worth of its business. while employers award bonuses for different reasons, there are many different types. executives receive higher bonuses that can multiply based on performance, while most employees earn bonuses equal to 1% to 5% of their overall salary. each employee is assigned a target bonus, in most companies, that reflects a possible bonus at the end of the year. what are the types of employee bonuses? bonuses are compensation paid to an employee.