23 Jul 2024
Stay—for Me! Using Retention Agreements to Keep Key Personnel During Turbulent Times
When an employer contemplates an acquisition, merger, or other corporate transaction, the employer often wants to be certain that key employees remain during (and often for a time after) the transition. Retention agreements are useful for this purpose and can provide for a retention bonus, enhanced severance, equity (including stock options or acceleration of such options), or a combination of these or other benefits to incent the employee to stay, even when the future is uncertain.
Related Content
- Retention Bonus and Change in Control Agreement
Learn how retention bonuses can be a useful tool where there is a concern that the departure of key employees could adversely impact a company's ability to, for example, achieve project-based or strategic goals, successfully grow the business, or maintain a competitive advantage. Retention bonus agreements generally provide for a financial benefit that is only earned by the employee if they stay with the company for a specified retention period, but they sometimes impose other conditions to payment, such as the occurrence of a specified event or achievement of a performance goal.
- Executive Retention Bonus (Letter Agreement)
See how retention bonuses (without a change in control) typically are a percentage of the executive's base compensation (often 10-50%). They can be used where the individual is performing an important function/project that can’t be upset if they leave mid-project.
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- Employee Benefits & Executive Compensation Key Legal Developments Tracker (Current)
Keep up to date on key legal developments!- ERISA Litigation/Controversy. Recognizing the U.S. Supreme Court’s recent Loper Bright/Relentless decision overruling Chevron deference to federal agencies’ regulatory interpretations, a Fifth Circuit panel heard oral arguments concerning the DOL’s regulations allowing fiduciary consideration of ESG factors when selecting plan investment options Utah v. Walsh, 2023 U.S. Dist. LEXIS 168696 (N.D. Tex. Sep. 21, 2023); Loper Bright Enters. v. Raimondo, 2024 U.S. LEXIS 2882 (June 28, 2024).
- Health and Welfare Plans. HHS’s Office for Civil Rights updates its “HIPAA and Reproductive Health” webpage to assist stakeholders, HIPAA covered entities, and business associates. HIPAA and Reproductive Health.
- Executive, Incentive, and Equity-Based Compensation. Following the U.S. Supreme Court’s ruling limiting federal agency power under the Chevron doctrine, a Texas district court enjoined the FTC from enforcing its nationwide prohibition on noncompetes with respect to the plaintiffs. Ryan LLC v. FTC, 2024 U.S. Dist. LEXIS 117418 (N.D. Tex. July 3, 2024); Court Blocks FTC Rule Banning Employment Noncompete Agreements on a Limited Basis.
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- Employee Benefits & Executive Compensation Key Legal Developments Tracker Archive (2020-2022)
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