Yeah, but your example is a little different than the OP's - I think part of this though is that the company is using the 'bonus' effectively as salary but with

Yeah, but your example is a little different than the OP's - I think part of this though is that the company is using the 'bonus' effectively as salary but with the idea that they don't have to guarantee its future. The company treats it like salary, the employees treat it like salary, recruiters probably mention it as part of comp like it's salary, etc. Then one day they decide not to do it, of course people are pissed. Netflix is right - you can't have 'bonuses' that are not tied to something real (like the article, and even then there are issues). If the formula is explicitly defined and publicly known then fine, otherwise it's a bad idea. I've found companies that rely on this also tend to underpay on salary, but say things like "we're competitive when you factor in the bonus that basically everyone gets". If you run a company this way and don't expect blow back when you slash everyone's comp by 6% you deserve the loss of talent. Michael Lopp has written something similar about the "Thanks for the Bonus, I Quit" in one of his management articles somewhere. The idea being that if you have a direct report and give them a smaller raise than they're expecting when they know peers are got larger raises (in percentage) the act of giving them the raise could be the trigger that gets them to say “I quit”. It might be because they're already on the higher end of the comp range, but without knowing this they'll be frustrated. Working effectively with people and comp takes effort and understanding how people will feel/think about comp. This kind of sense of fairness goes back a long ways: https://www.youtube.com/watch?v=meiU6TxysCg https://www.youtube.com/watch?v=meiU6TxysCg I don't think it's realistic to expect people not to behave this way, good managers (and companies) should model it. --- Also - I doubt the execs at eBay saw less comp during that time.