If you are a CEO, COO, CMO, CTO or other senior officer of your company, it is important to understand why proposing a retention agreement with your company could be beneficial to you. If you are being recruited or an attractive opportunity has been offered or is forthcoming, it is time to consider the option of negotiating a retention agreement. The most important step you can take is to confer with an attorney experienced in negotiating retention agreements to help ensure the process goes smoothly and you get the most benefit out of the agreement.
Initially, you should begin the conversation with your company by focusing on the need for retention, including what your departure from the company could cost the company. By contracting to keep you with the company, it will prevent any immediate damage while also providing time for the company to lessen its dependence on you.
For example, if you have a solid relationship with a client and you have been working on an $8 million deal that could close within a few months, your role is obviously important to the company. Your request for a retention package of $500,000 is a small portion of the significant benefit the company gains by retaining you as an employee. It is an even easier deal to make if the majority of your retention package is paid after the deal closes.
The amount of time a key employee agrees to stay with a company will differ with each unique situation. In some instances, a few months may be enough, while in other cases a year or more may be required. This may require you to decide whether it is better to take the retention agreement and give up the other employment opportunity, or to accept the new offer. If the retention period requires you to forego the other employment opportunity, then it is reasonable for you to ask for additional compensation to make you whole.
The main idea behind a retention agreement is for it to be a win-win for both you and the company. You have been employed for a significant period of time and established your value to the company. By negotiating a retention agreement, the company can take full advantage of the value you have created. It also allows you to reap the benefit of your hard work, rather than simply walking away from it.
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 as possible. Contact our office today.