A bonus refers to something given over and above what is usual or expected. In financial terms, a bonus normally takes on the form of cash given on top of the usual amount.

For an employee, a bonus is additional money given on top of his normal wages. Employee bonuses vary depending on the circumstances. In certain parts of the world, Christmas bonuses are given every December. In some companies, mid-year bonuses are given to employees around June or July.

Some companies do this across the board without discrimination, while some companies peg bonuses to the performance of the employees. Another kind of employee bonus pegged to one’s performance is the bonus given after the annual appraisal. Depending on the criteria of the company, deserving employees receive a bonus.

There is also what is called a signup bonus. Some companies make it a practice to give out a certain amount to newly hired employees as an incentive. The amount varies depending on the company and the nature of the job. The United States military actually practices this.

Companies also give out bonuses to shareholders. This kind of bonus is called a dividend. Shareholders normally receive dividends when the company makes a larger profit than what was projected at the beginning of the fiscal year. The giving out of dividends depends on the discretion of the board of directors.