Performance-oriented compensation systems are currently making negative headlines in the media. The reason is exorbitant bonus payments to managers, which are met with widespread public disapproval. This disapproval is even greater when a bonus is granted despite the obvious failure of a company. However, performance-oriented compensation systems do not only include bonus payments for managers. Performance-based compensation takes many forms. Terms such as commissions, bonuses, stock options, royalties, gratuities, and premiums generally refer to forms of performance-oriented compensation. The fundamental principle is the same across all forms: a variable compensation component, the amount of which is not predetermined, is paid out based on a performance criterion when a specific performance target has been achieved.