An annual bonus pool is the company-level amount available for awards under a defined compensation plan. The funding rule explains how company results create the opportunity. Allocation describes how it is shared.

Trace the same dollar through the plan

In a hypothetical design, 10% of $1,000,000 of defined pre-bonus operating income creates a $100,000 pool. A 15% allocation gives a leader a $15,000 opportunity. The agreement still determines what is earned and when it is paid.

Define the period, financial basis, adjustments, eligibility, performance conditions, reserve and payment timing. Test the whole calculation so company performance does not accidentally increase both funding and every award beyond the supported amount.

Keep funding and cash distinct

The pool is a calculation under the plan, not necessarily money held in a separate bank account. Review actual cash needs with finance. Unawarded reserve and an earned amount awaiting payment have different meanings.

M22: Company-Wide Bonus Pool explains the complete design, actual administration and review.