Special Bonuses

In the dynamics of the business, it is often necessary to have bonus systems designed ad hoc to solve specific problems, of circumstantial characteristics. Among these "Special Bonuses", we find:

Hiring Bonus

A Hiring Bonus, also called Hiring Bonus or Signing Bonus, is a sum of money that we can pay to a new employee as an incentive for him/her to decide to come to work with us. It can be used to improve the compensation offer (for example, if the annual salary is lower than what the candidate wants), and it is especially useful to compensate for possible losses that an employee could have when leaving his current job (for example accumulated in the pension plan, offset a Retention Bonus, others). It also prevents the company -needed to ensure the income- from violating the internal balance, since it is a one-time payment. Also, if the employee does not meet expectations, the company has not committed itself to a higher salary.

Retention Bonus

This is an additional payment or reward to an employee's usual compensation scheme. This payment is offered as an incentive to keep a key employee on the job during a critical time in the business, such as a merger or acquisition, certain projects or launches. Retention Bonuses have served as a tool for companies to keep their most valuable employees. Many believe that the use of Retention Bonuses is a successful tactic to retain critical personnel, and also to add value to the business, since the tool reflects the Company's strategy and promotes loyalty in both the employee and the employer. However, it needs to be used with much caution and precision so that it does not lose effectiveness. It may also be necessary to frame these incentives in a medium-term strategy, given that at the time the payment is made the exit barrier drops.

Transaction Bonus

These incentives help retain and motivate key executives and employees during a Company sale or merger process. They are awarded for reasons ranging from rewarding the extra effort often involved in preparing the Company for its successful sale, to ensuring that critical employees are employed by the Company at the time of closing. An alignment of interests will always be sought to make the transaction and transition successful. The amounts, timing and forms of the agreement are all matters that must be decided and customized for each situation. When all parties work in unison, great results can be achieved. At least one of the reasons buyers pay high prices for a deal is that they believe the "system" can continue after the property is conveyed.

Golden Parachutes

These are private agreements in which special conditions are agreed between the parties (Company and Executive) that go beyond the rights and obligations established in current legislation, and which serve primarily to attract and retain the most valuable and talented employees in an organization. They may include financial retention arrangements such as an aggravated severance clause in the event of unilateral termination by the employer, long-term cash bonuses, stock or stock options in their various varieties (preferential right to purchase, restricted, bonus) and, to a lesser extent, pension plans.



CompStrategy can help with:

• Determining the right tool based on your company's business moment and objectives
• Determination of the applicable amounts based on observed market practices
• Choice of profiles to be retained through incentives
• Choice of profiles to be recruited by offering a hiring bonus or golden parachutes