A very small (and not at all original) footnote to the recent flap over AIG’s awarding hefty bonuses to many of its executives (after the U.S. government had taken over a substantial part of the company’s indebtednes). There’s been a lot of rage about this, including a lot of rage about the company’s defense that the bonuses were contractual obligations. This is, in a way, a language issue.

In ordinary language, a bonus is something extra, typically a reward. As NOAD2 has it:

a payment or gift added to what is usual or expected, in particular … an amount of money added to wages on a seasonal basis, esp. as a reward for good performance

In many firms, there are annual bonuses for employees who have performed especially well (for instance, by having brought in top dollars to the company). Especially in larger firms, when the company’s earnings exceed some benchmark, all employees in some pool get a bonus. In the State Teachers Retirement System of Ohio (which supplies me with most of my income), there used to be — and, perhaps, might be again some day, though probably not while I live — annual bonuses to pensioners when the fund’s investments exceeded targets.

This is not what we’re dealing with in the case of AIG and some other companies: for them, a bonus is just another kind of compensation, which can be stipulated in a contract (hence the mess over “contractual obligations”).

We’re on the border between ordinary and technical language here. Bonus has found its way into ordinary language, but it still has specialized uses. The AIG use, in which it designates a contractual obligation (admittedly, one that is not fixed ahead of time and can be reduced by circumstances, but not below some floor), is foreign to most ordinary people. Hence the bafflement.

One Response to “Bonus”

  1. Michael T. Wescoat Says:

    My reaction to the AIG bonuses was conditioned by my experience in Japan, where workers get two boonasu (from Eng. bonus) payments a year. As I recall, these are negotiated by unions and are simply a part of the pay schedule. In other words, the yearly salary is divided up into twelve monthly payments and two boonasu payments, the latter being equivalent to some multiple of the monthly amount—I have forgotten the actual figures. Whereas in English the sense of bonus having to do with remuneration seems to be closely associated with the notion of merit-based pay, I would expect that in Japanese the lexical semantics of boonasu is devoid of this notion. (If any native speakers of Japanese are reading this, perhaps they could comment.) Thus, I am guessing that in the world of AIG and Wall Street, bonus is used in the way that boonasu is used in Japanese.

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