Retention Bonus, any advice?

Submitted by fixquesto t3_yioeyw in personalfinance

I haven't had any experience with this before, so I'm hoping to learn about how retention bonuses work and when they may be provided to employees.

My employer has been post-merger for about 1 year now. I just got a call from my boss who has told me that I've been selected as a recipient of a "retention bonus" for staying and helping work through the hiccups that come with a merger. This is not being provided to everyone, just a select few individuals. It is somewhere in the $5-10k range. It was presented as a no strings attached additional bonus, and I have no reason to think that my boss was lying.

After extensively googling, this type of bonus appears to normally come with a commitment to staying with the company in the future rather than as a "thank you" from my company for staying through the merger. So now I have my doubts. I will of course be asking for more information from my boss tomorrow because it seems a bit vague.

Any advice on how these bonuses normally work and different scenarios when they are typically provided would be greatly appreciated.

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Bright-Entrepreneur t1_iujn0l2 wrote

Typically it’s a 1 year commitment for that size and type of bonus. You’ll know if there’s strings attached if and when you have to sign something or you’ll get some kind of printed letter from your boss or HR. If you get zero communication about any strings attached or the duration of the commitment, then you can always just ask HR.

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fixquesto OP t1_iuk20oo wrote

Thanks, and agreed. What's confusing me is that this is offered 1 year after the completion of the merger. As much as the internet research I've done can offer, this commonly seems to be offered through the merger rather than 1 year post-merger. But again, this is just from Googling. Does the timeframe seem... Strange?

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Bright-Entrepreneur t1_iuk3jpv wrote

Not really. Labor market hot - suddenly worried about losing some key people or maybe they just lost some key people and don’t want to lose more. Happens. Random retention bonuses can happen even with no mergers in the picture.

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xikubuek t1_iuk35e2 wrote

Merger may have included $$$ for retention bonus? I had one they forgot to ask me to sign after giving notice to quit. Quit shortly after

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fixquesto OP t1_iuk3ckx wrote

Good point, I did not think about that. Will definitely be keeping a close eye on how this develops...

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2manyHats t1_iujmxq0 wrote

Any bonus that has specific terms should come with some sort of paperwork. An email or a contract that indicates the terms of the bonus. If they just give you money then it's just money that you have. I would expect to see something like a promise to pay it back if you leave the company within a year or something like that.

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Rave-Unicorn-Votive t1_iujngpa wrote

It may just be a semantical wording/naming issue. Confirm with your boss that the bonus is for "time served" and not for a future commitment. If you have a really good relationship with your boss you can simply say (with a smile), "So I can leave next week and still get to keep the money?"

If it is in fact for time served then it's really just a regular performance bonus, that it is specifically because you stuck around is making someone call it "retention" but, based on your description, it's tied to past performance rather than future performance.

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jasperjava t1_iujnkag wrote

Typically there is a burn off and if you leave before hand you owe a portion back.

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Redpandaling t1_iuk0k7l wrote

Though usually you hear of that type of bonus when the merger happens, not a year later.

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fixquesto OP t1_iuk2rdd wrote

Thanks, yes what seems to be throwing me off is the timing of this all. I'm not too sure why this would be offered afterwards rather than during the merger if there was a fixed period of time that I would have to serve to receive it. If they were to offer retention bonuses, I feel like retention through the merger would be more valuable to the company versus after. Will be asking for more clarity tomorrow.

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Redpandaling t1_iuk32tu wrote

Yup. Just make sure to read any paperwork they ask you to sign!

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jokerfriend6 t1_iujoi0o wrote

Our company last year had bonus's they handed out to help stop the bleeding, and on the back side. They only gave meager raises to employees.

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sudoku7 t1_iujp4ol wrote

I've gotten one of them before because the company was seeking to encourage employees to quit (no raise, benefit reduction) and I was one of the employees they did wanted to keep.

They also won't tell you this is the reason (it's something you often have to intuit or find our from senior leadership who is on their way out).

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the1righttool t1_iujpzrk wrote

I was in a similar situation in a job ten years ago. My employer made it clear that the bonus would only be paid if I stayed through the target date. All of our jobs were ending on the same target date, so the trick was to not start the new job search too soon and risk missing out on the bonus, and not start too late where you might have a few months without income before starting the next job.

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SquareVehicle t1_iujra5j wrote

You just need to clarify when you actually get the bonus. Because there's two types:

  1. You get the money in the next paycheck or two. It's a "Thank you for not quitting on us" gesture of good will with no strings attached.
  2. You get the money one year from now (in Oct 2023) so you have to stay on the job for another year until you get the money. This is much more common for "retention" bonuses and why you found this type more often when you did your Googling. Often the timeline is actually spread out over multiple years so you get 1/3 after one year, another 1/3 the 2nd year, and the last 1/3 the 3rd year but it can vary drastically so you'd just have to check with your boss. I have had 1-year get-it-all retention bonuses like this, but is just more rare.

Both are very normal business practices to retain employees and keep them happy. I've gotten both types in my career.

Since it's only $5k and he said it was "no strings attached" then it's probably the first type but just talk to him and clarify it.

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benicebitch t1_iujrdx5 wrote

If there are strings, you'll sign something. Just put the money in to savings if you happen to leave before the clawback is up.

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bepr20 t1_iujrx9t wrote

Most retention bonuses are paid at completion of the term as an incentive to stay, without a lockin after payment.

In those cases you would get the $5k to $10k after the retention period.

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mygirltien t1_iuka7ao wrote

Your definitely going to have to sign a doc. What you need to figure out is how the payout works and if you get it even if they let you go prior to the timeframe. The last one i got was a big one but had lots of strings. 1/2 at 1 year, other half at year 2, once paid it was mine but if i got let go or left 1 day before payout i wouldnt get paid. Most of the time these bonus come because they are planing on major restructuring which probably includes your dept and maybe your role but they dont want everyone jumping ship and leaving them high and dry. Once the rumors start everyone starts looking for work. In my case they stayed true to their word. I stayed the 2 years, got a nice payday and then everyone most of us got let go. New it was coming and the payday made it easy to chill while looking for work. You boss may be telling you the truth but may also have job on the line and not know it. Long way of saying it doesnt cost you anything to take it. So take it but keep your ear to the ground and eyes open.

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