LinkedIn is overhauling how it awards annual corporate bonuses, according to an internal memo viewed by Business Insider.
The Microsoft-owned professional social network currently awards bonuses as a combination of company performance (50%) and individual performance (50%). Starting in 2027, employees’ end-of-year bonuses will be based solely on their individual performance during the fiscal year.
“At Linkedin, we believe you should be recognized and rewarded for the impact you make,” the memo states. “That’s at the heart of our pay-for-performance philosophy, and our bonus plan is an important part of how we recognize and reward you for your contributions.”
Bonus targets will remain unchanged and the new policy excludes employees with sales quotas.
“We’re updating our bonus plan to create a more direct connection between individual performance and bonus payouts,” a LinkedIn spokesperson said.
The change shifts compensation away from a model in which employees shared in the company’s financial success and gives managers greater influence over bonus decisions to incentivize top performance.
Other major tech companies have been ratcheting up performance pressure on employees by tying more compensation to individual performance. Some of these changes offer bigger rewards to top employees while tightening expectations for those who fall short.
LinkedIn’s parent company Microsoft has this year overhauled its performance review system, making performance distinctions significantly sharper.
The bonus change follows a period of cost-cutting at LinkedIn. In May, the company laid off employees and said it would scale back investments in areas including marketing campaigns, vendor spending, customer events, and under-used office space.
LinkedIn CEO Daniel Shapero told employees at the time that the company needed to operate more profitably while redirecting investments toward priorities such as infrastructure.
Read an excerpt of the memo:
At Linkedin, we believe you should be recognized and rewarded for the impact you make. That’s at the heart of our pay-for-performance philosophy, and our bonus plan is an important part of how we recognize and reward you for your contributions.
With that in mind, I want to share a change we’re making to our bonus plan beginning in FY27.
This applies only to those in our corporate bonus program and does not apply to quota-carrying roles on sales compensation plans.
What’s changing: Beginning in FY27, we’re simplifying how we calculate annual bonus payouts.
Before, bonus payouts were determined by a combination of company performance (50%) and individual performance (50%).
Now, your end-of-year bonus payout will be based entirely on your individual performance during the fiscal year. This creates a more direct connection between the impact you make and the rewards you receive.
What isn’t changing: Your bonus target. Bonus targets remain targets, not guaranteed payouts.
Higher performance may result in a higher payout, while lower performance may result in a lower payout, and your manager will continue to differentiate bonus payouts based on individual performance. This change to remove the corporate component won’t impact the funding of our bonus plan. How we perform as a company continues to be important.
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