Incentive Bonus Agreement Design

Summary

This practice note discusses incentive bonus compensation arrangements. Employers frequently grant equity awards and cash bonuses to incentivize key employees. The first part of this practice note focuses on key considerations with awards that are intended to encourage a key employee to accept a position with the employer (i.e., a sign-on bonus or sign-on equity awards). The second part of this practice note addresses short- and long-term cash incentives to influence executives to remain with the employer and/or focus on specified performance goals.