A few years ago, Sullivan & Cromwell announced that year-endbonuses would be cut in half, with a maximum of $17,500 forearly-career associates and $32,500 for eighth-year associates. Inthe following two years, bonuses were cut further. However, thetrend was then reversed with bonuses subsequently being increased(to range from $30,000 to $65,000 for associates), and morerecently, as Exhibit 1 shows, there are further increases inbonuses. What drives these bonus decisions and how they vary overtime? How does this bonus variability over time compare tovariability in salaries over time at Sullivan & Cromwell? Whatexplains the difference in the way salaries and bonuses are managedover time?