Bonuses should be discretionary and not only performance-based, AIG bonuses aside; there was no discretion there and apparantly no performance either. I can see giving a bonus for effort and encouragement. In fact, I have done this often.
It's like when I was growing up. My sister could have done a better job than I, but because my mother wanted to encourage me, I got the reward. Also, we could have done the exact same thing equally as well and she would get the reward.
As the leader of our family my mother understood what was needed, even when at the time I did not—though I thought I did. What was important was the continual effort on my sister and my part to give our best always which would benefit the whole household. When I benefited, all benefited. But all may not have received a reward--irrespective to our excellent effort or not.
Succinctly put, leadership is key with regards to discretion and how it is explained to all essential. Bonuses are good and should be both discretionary and performance-based.
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