A discretionary bonus is a type of financial reward that is given to employees at the employer's discretion, typically as a form of recognition or appreciation for exceptional performance or contributions. Unlike other types of bonuses, such as performance-based or profit-sharing bonuses, discretionary bonuses are not based on a predetermined formula or specific criteria. Instead, they are given out as a subjective decision by the employer or management.

Example
ABC Company occasionally awards discretionary bonuses to employees who have demonstrated exceptional performance or made significant contributions to the organization. The bonuses are given at the discretion of the management team based on various factors, such as outstanding achievements, innovative ideas, or exceptional teamwork. The amount and timing of the bonuses may vary depending on the circumstances and the available budget. The purpose of these discretionary bonuses is to recognize and reward employees for their outstanding efforts and to motivate continued excellence.