Every company I have ever heard of, has a ‘gating function’ to determine if any bonus is going to be paid to anyone.
Did the company make a profit?
If the company did not make a profit, no one gets a bonus. If the company made a profit, the bonus paid is a function of how much profit was made.
How can any company pay out billions of dollars in bonus, when the comapny lost money? Is it any wonder they went belly-up?
>>How can any company pay out billions of dollars in bonus, when the comapny lost money?
You’re thinking of these companies as monolithic entities. There’s been a lot of consolidation on Wall Street and when a smaller company gets acquired, their bonus pool is often kept separate based on their own performance rather than the company-wide performance. So, a company can be an overall loser, but the few REALLY profitable sub-units will still be paying out big bonuses.
Contracts of senior management are very complex (in part because of our ridiculous tax code), just like those of movie stars, basketball players, etc. They belong together for a reason: contrary to what socialists tell you, to lead a company requires talent.
Now, much of what CEOs get is not actually a bonus but a form of deferred (for tax reasons) compensation --- just as if you would agree to get half of your salary this year and half the next. Unfortunately, "bonus" is used in all these cases, which is misleading.
Further, managers are often hired and promised a bonus for a specific task: e.g., increase market share by 5%. If that objective is achieved, what does it matter whether the company as a whole is profitable or not?
There are also other issues. FOr instance, the brilliant turn-around specialist slows down the decline of a company --- a real achievement --- but the co is not yet profitable. Should (s)he not get a bonus for the job well done?
Finally and most importantly, their total compensation is determined by the market just like any other. If these talented people do not EXPECT to be compensated properly, they will go elsewhere.