Quarterly bonus, Jonah Adeyemi, Northreach Sales Group

Bonus letter template that shows how the amount was calculated

A bonus letter that gives only a figure invites the one question it cannot answer, which is how that figure was reached. This one shows three components with their target, their actual and the dollars each produced, totals them to $4,250, names the pay date and says plainly that the bonus is discretionary.

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Northreach Sales Group
Level 6, 210 Farrier Lane, Ashford ยท people@northreach.example

5 October 2026
Private and confidential
Jonah Adeyemi, Account Manager
Mid market team

Bonus of $4,250 for the quarter ended 30 September 2026

Dear Jonah, you have been awarded a bonus of $4,250 before tax for the July to September quarter. Here is exactly how the figure was reached, so you can check it against your own numbers.

What it was based on
Target
Actual
Amount
Revenue against quota
$420,000
$497,000
$3,150.00
New accounts opened
5
7
$700.00
Renewal rate
90 per cent
94 per cent
$400.00
Total before tax
$4,250.00
Jul to Sep
Quarter
$4,250
Amount
Wed 14 Oct
Paid
This bonus is discretionary
It is decided quarter by quarter, it is not a term of your contract, and being paid one quarter creates no right to a bonus in any later quarter.

The bonus is paid with the pay dated Wednesday 14 October 2026, through payroll, with tax withheld at the rate that applies to a lump sum. It is not added to your base salary.
It was a good quarter, and the renewal number is the one to be proud of. Yours sincerely,

Priya Vasanth, Sales Director, Northreach Sales Group
Date
:

Section by section

What each section is for, so you can keep the ones you need and drop the rest.

Letterhead and addressee
Northreach Sales Group masthead letterhead, 5 October 2026, private and confidential, to the account manager.
Subject
Bonus of $4,250 for the quarter ended 30 September 2026.
Opening
The amount before tax, the quarter, and an invitation to check the figure against his own numbers.
How it was calculated
A table of three components with target, actual and amount, totalling $4,250.00 before tax.
Quarter, amount, paid
A three value strip: July to September, $4,250, Wednesday 14 October.
This bonus is discretionary
A callout: decided quarter by quarter, not a contract term, and no right to a later bonus.
Payment and sign off
Paid through payroll on 14 October with lump sum withholding, not added to base salary, then the closing line.
Signature block
One party, the sales director, with a date line.

How to adapt this document

For an annual bonus, keep the same table but add a column for the prior year's actual, since the comparison is the point over a twelve month period and a single quarter's figures do not carry it. For a bonus that is wholly discretionary with no formula, replace the target and actual columns with a short description of what each part of the award recognises, and keep a dollar figure against each one, because an undivided lump sum teaches the employee nothing about what to do again. For a team bonus, add a row naming the pool and the number of people it is split between, state the basis of the split, and send each letter individually, since a shared figure with individual amounts attached is the fastest way to start a comparison nobody wanted.

What makes this document work

Three components, and the arithmetic adds up

Revenue of $497,000 against a $420,000 quota produced $3,150, seven new accounts against a target of five produced $700, and a 94 per cent renewal rate against 90 produced $400. The total row reads $4,250.00, which is exactly the sum, so nobody has to take the figure on trust.

The discretionary statement comes before the sign off

The callout says the bonus is decided quarter by quarter, is not a term of the contract, and that being paid one quarter creates no right to a bonus in any later quarter. Putting it above the closing line means it is read rather than skimmed past as boilerplate.

Payment mechanics are handled in two sentences

Paid with the pay dated Wednesday 14 October 2026, through payroll, with tax withheld at the rate that applies to a lump sum, and not added to base salary. Those are the three things an employee wonders about a bonus, and they are answered before they are asked.

Questions people ask

What should a bonus letter include?

The amount before tax, what it was based on, the payment date, how it will be taxed, and whether it is discretionary. This one adds targets and actuals for each component, which is the difference between a letter that motivates and a letter that is filed without being read twice.

Does calling a bonus discretionary make it discretionary?

The label helps but the practice matters more. A bonus paid on a formula every quarter for years starts to look like a term of employment regardless of the word used. Keeping real discretion over the amount, and saying so in each letter, is what keeps the label accurate.

Is tax withheld from a bonus differently?

Lump sum payments such as bonuses use a different withholding calculation from regular wages, which is why the take home amount rarely matches a simple percentage of the gross. Saying so in the letter, as this one does, heads off the question that follows the payslip.

Should a bonus be added to base salary?

Not unless you intend it to be permanent. This letter says the bonus is not added to base salary, which keeps the following quarter's calculation clean and avoids compounding a one off result into an ongoing cost. A genuine rise is a separate letter.

What if a component was missed?

Show it anyway, with the target, the actual and a zero. A bonus table that lists only the components that paid out teaches nothing, and the employee will assume the missing one was quietly dropped. Transparency in a good quarter is what makes the table credible in a bad one.

Can a bonus be withheld after it is announced?

Once a letter states an amount and a payment date, withholding it is a serious step and usually a breach of the commitment just made. If payment depends on something still outstanding, such as employment on the pay date, say so in the letter before the amount rather than after it.

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