Lord Wolfson said in a letter to employees that an incentive scheme he was awarded in 2011 had grown and was "more valuable than I could possibly have hoped".
He said that instead of accepting the bonus he had decided to share it among staff who have worked for the company since 2011 - around 20,000 employees. Shared equally, it would be worth £200 per worker.
The money will be shared in proportion to a worker's annual salary, giving them a 1.5% pay rise, as a one-off bonus next month.
Lord Wolfson also announced that the annual pay review will be brought forward from October to June, and that hourly rates will rise by 37p from June 1.
Mick Rix, the GMB union's national officer for retail staff, said: "This pay rise, while welcome, will place Next staff 18p above the national minimum wage of £6.50. This is well below a living wage of £7.65 an hour outside London and £8.80 in London, while 30,000 of the 50,000 employees will get no share of the £4 million bonus."