Responding to a Retention Bonus Offer

If you are offered a retention bonus, your first instinct may be to readily accept it because unexpected money is always exciting. However, before you go with your first instinct, take time to consider the following:

● Read the contract closely and make sure you understand all its terms. You should also confer with an experienced attorney who can give you advice on how to best protect yourself.

● Look for the “sole discretion” provision. It is common for employers to include a clause in a retention contract that provides you will only get your bonus payment if you perform your job satisfactorily in the employer’s “sole discretion.” In other words, your employer gets the final say in whether you receive the payment or not. Further, their decision is not subject to review of any kind.

● Another common clause used by employers is that you must be “actively employed” on a specified date to receive the bonus payment. Too many questions can arise regarding this language. What if you are terminated without cause before the specified date? What if you are out sick or on vacation on that date? Your attorney can help you revise this language to make it clear and within your control.

● Similar to the point above, you should try to eliminate any language that conditions your payment of the bonus on circumstances out of your control. For example, you do not want your bonus payment to occur after a deal closes or a merger occurs, because what happens if that event doesn’t happen?

● While an employer should have the ability to terminate an employee for cause, you should insert language in your retention contract that requires the employer to give you a written explanation of what you allegedly did wrong and a period of time to rebut or correct the issue.

● Finally, don’t be afraid to ask your employer for a higher retention bonus if you believe you deserve it. During your retention negotiations, you have more leverage than you have had before, so use it. You don’t want to miss out on the opportunity to better your situation.

Negotiating and drafting retention agreements is Mailly Law’s primary area of practice. We have years of experience and understand the complexities involved. Let us fight for your rights and help obtain a contract that is the most beneficial to you. Contact our office today.