Home Depot raises threshold to 95% and cuts manager bonuses to 25%

Home Depot notified eligible employees across stores and corporate offices in an internal memo dated February 24, 2026 that it had raised the sales-performance minimum for certain company-level manager incentives from 90% to 95% and cut the payout for meeting that minimum from 50% of target to 25% of target. The memo framed the change as an effort to align the incentive structure more closely with "pre-pandemic standards" and to reinforce accountability, and the communication did not attach a full public copy of the policy to employees receiving the notice.

The memo named management-level recipients and also applied to hourly and salaried associates eligible for company-level incentives tied to store or corporate metrics, with the company telling those groups the new rules would govern eligibility going forward. The notice went to employees in both store locations and Home Depot corporate offices, and managers who previously counted on a 50% minimum payout at 90% sales performance must now meet a higher 95% threshold for a 25% payout.

The bonus change comes as Home Depot is navigating softer demand and operational cuts. Home Depot’s U.S. comparable sales rose just 0.1% year over year in the third quarter of 2025, and same-store foot traffic declined 0.4% year over year during that quarter, based on Placer.ai figures. Separately, the company and its subsidiaries have closed distribution facilities: an HD Supply site in Mexico, Missouri was closed in October, eliminating 61 jobs, and a distribution facility in La Vergne, Tennessee was shuttered "last month," resulting in 108 layoffs.

Housing-market headwinds were cited as part of the broader backdrop for the decision. NAR chief economist Lawrence Yun said in a press release that "Due to low supply, the median home price reached a new high for the month of January," a dynamic that analysts and company observers have tied to affordability pressures and softer remodeling demand that affect Home Depot traffic and sales.

The move also fits an industry pattern of smaller and less-frequent bonus awards. ADP research shows bonus use peaked in 2021 when nearly 44 percent of workers received one, and by 2024 fewer than 40 percent of workers had bonuses; the median bonus payout for U.S. workers was $1,786 in 2024, down from $1,857 in 2023. "The temporary labor shortages of the Covid-19 pandemic likely contributed to this bump in bonus awards," Jeff Nezaj, ADP director of analytics, wrote, noting the pandemic-era spike in bonus use.

Employees and managers reacted on social platforms and in internal forums. One LinkedIn commenter, Tom Buffo, warned that the change looked like "a squeeze of middle management" and said, "HD should expect their best managers will find new companies who actually value their contribution." Other employee posts described managers being tightly managed on overtime and staffing targets, with examples of associates being sent home early to avoid overtime hours.

The memo did not make the effective date and scope fully explicit in the copies seen by employees; one summary of the notice said the changes were set to affect payouts in September, but available internal text did not confirm a year or whether executive-level incentive plans are covered. Until Home Depot publishes the full memo or provides clarification on timing and covered job grades, managers and eligible associates will face a higher performance bar and a materially smaller minimum payout for meeting it.