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What is "profit sharing"

Longman Dictionary of Contemporary English
profit sharing
noun
EXAMPLES FROM CORPUS
▪ Another argument against profit sharing is that employee effectiveness is not the only determinant of profit performance.
▪ He doesn't believe that extra money motivates, whether that money be a bonus, profit sharing or a salary increase.
▪ Members of staff benefit directly from the Group's success through profit sharing.
▪ Similar principles apply in the case of bonuses, which often involve an element of profit sharing.
▪ The basic methods are profit sharing, partnership schemes and earned bonus.
▪ The project also studies the incidence of profit sharing and employee share ownership across the economy.
Wiktionary
profit sharing

n. A system in which some of the profit of an enterprise are divided among the workers, giving them an incentive for profits without an equity interest.

WordNet
profit sharing

n. a system in which employees receive a share of the net profits of the business

Wikipedia
Profit sharing

Profit sharing refers to various incentive plans introduced by businesses that provide direct or indirect payments to employees that depend on company's profitability in addition to employees' regular salary and bonuses. In publicly traded companies these plans typically amount to allocation of shares to employees.

The profit sharing plans are based on predetermined economic sharing rules that define the split of gains between the company as a principal and the employee as an agent. For example, suppose the profits are x, which might be a random variable. Before knowing the profits, the principal and agent might agree on a sharing rule s(x). Here, the agent will receive s(x) and the principal will receive the residual gain x-s(x).

Usage examples of "profit sharing".

That means those numbers determine how much we can pay you and how much you get in your pension plan and what your profit sharing statement will look like.

Used to be that guys from the plant came to inspect your house and if you weren't living right then you didn't get your profit sharing, or lost your job.

Those who had received stock through profit sharing now owned bits of a company that was nearly dead.