How does a bonus system work?
It's different in different companies/industries.
(Most of the rest of my replies are based on my own experience.)
I've never worked in a field that offers one, and I don't quite get how a "bonus" is predictable and expected part of your compensation.
It simply is predictable. In my company's case, under-performers (a relatively small percent of employees) get no bonus, most get something similar to the bonus you got last year (perhaps scaled up a bit if you got a promotion in the meantime), and if you did something especially awesome you might expect a larger bonus.
So people do predict it, at least in terms of round numbers, and do count on it.
(Note that "count" on it just means it's part of their expectation. Perhaps some people spend it, but I "count on it" as contributing towards my FIRE plans.)
People talk about bonuses in the same terms they'd use to describe their salaries, but if that's so why are they different?
You're guaranteed to get your salary.
The bonus is discretionary. It's predictable (as above), but still technically discretionary.
Is it based on individual performance? Company performance?
In my case, as above, it's based on individual performance.
A buddy of mine in the same industry has his bonus (and those of his co-workers) based on company performance.
Is the amount spelled out in an employment contract?
No.
My ignorant gut reaction wants to say "It's a bonus, be happy with what you got."
Most people, given a certain thing repeatedly for years as part of compensation, would be displeased if it were unexpected no longer being given to them. Or were significantly smaller than what had been given in the past. It's just human nature.
Salaries and wages are periodically brought back into balance with inflation, but are bonuses supposed to be as well?
Yes. Otherwise your total compensation declines from year to year.
As said by others earlier, it's pretty reasonable (or at least common) to complain when you get a salary cut. Even if you're making $160k.
It would be much less reasonable to say "$160k isn't enough to get by in this world", but that really isn't what's being said in the article.