Question

When a company offers additional compensation based on the contingency of certain goals being met by individual employees, this is referred to as

A. profit sharing.
B. a bonus.
C. a stock option.
D. a fringe benefit.
E. a piecework system.
F. a salary.

Answer 1

A bonus is additional compensation offered to employees for meeting specific goals, distinct from profit sharing or stock options, and is usually in the form of a cash reward.

Step-by-step explanation:

When a company offers additional compensation based on the contingency of certain goals being met by individual employees, this is referred to as a bonus.

This type of supplemental pay is meant to reward employees for achieving specific targets or performing exceptionally well in their roles. The objective is often to incentivize productivity and align employees' interests with the success of the business.

Unlike profit sharing, where profits and earnings are distributed among employees, or stock options that provide the opportunity to purchase company stock at a reduced price, a bonus is typically a cash award given directly to employees for meeting predefined objectives.