Retention Bonus

AAA

DEFINITION of 'Retention Bonus'

A payment or reward outside of an employee's regular salary that is offered as an incentive to keep a key employee on the job during a particularly crucial business cycle, like a merger or acquisition, or during a crucial production period. In recent years, retention bonuses have become increasingly popular as corporate poaching has increased.

BREAKING DOWN 'Retention Bonus'

With the corporate landscape changing almost daily and a liquid labor market allowing workers to move from job to job more easily, retention bonuses have provided a great way for companies to keep valuable employees. Many believe that such methods add value to the business as well, as they reflect well on company's management and promote loyalty on both sides.

RELATED TERMS
  1. Performance-Based Compensation

    An incentive-based form of compensation that is reserved for ...
  2. Incentive Stock Option - ISO

    A type of employee stock option with a tax benefit, when you ...
  3. Long-Term Incentive Plan - LTIP

    A reward system designed to improve employees' long-term performance ...
  4. Year-End Bonus

    A reward paid to an employee at the end of the year. Many year-end ...
  5. Indemnity

    Indemnity is compensation for damages or loss. Indemnity in the ...
  6. Back Pay

    The amount of salary and other benefits that an employee claims ...
Related Articles
  1. Professionals

    6 Employment Perks And How To Get Them

    Find out how to get more than money from your employer.
  2. Retirement

    How Unemployment Affects You (Even If You're Working)

    Rebounding from a stint of unemployment can be a frustrating thing to do. These tips should soften the blow.
  3. Personal Finance

    Employee Benefits: How To Know What To Choose

    Starting a new job is stressful but you don't need to sweat about setting up a benefits package.
  4. Personal Finance

    How To Get That Entry-Level Financial Analyst Job

    Landing a job as a financial analyst takes study, strategy and a lot of hard work. Here's how to hone your competitive edge.
  5. Savings

    All About Income

    Income is the money you or a business earns by providing goods or services, or through investments.
  6. Taxes

    Top Tips for Minimizing Taxes on Severance Pay

    A look at the top ways to lessen the tax burden on severance pay.
  7. Professionals

    8 Justifications For Sky-high CEO Salaries

    Why are CEO salaries so astronomically high? There may be more to the story than you think.
  8. Personal Finance

    8 Reasons Why Valued Employees Quit

    Salaries are important, but retaining top employees requires more than just providing competitive pay.
  9. Personal Finance

    Top 5 Ways to Retain Your Best Employees

    You need to think beyond salary to make the most talented people want to stay on for the long term.
  10. Personal Finance

    Justifications For High CEO Pay

    CEOs tend to command sky-high salaries in America. Companies cite a number of reasons for this, but they don't always ring true.
RELATED FAQS
  1. What are some ways employers can reduce employee turn over?

    Employers can reduce employee turnover through the use of certain hiring practices, management methods, compensation, benefits ... Read Full Answer >>
  2. Does my employer's matching contribution count towards the maximum I can contribute ...

    Contributions to 401(k) plans come from employee salary deferral and employer match dollars. According to the IRS, employees ... Read Full Answer >>
  3. How is marginal propensity to save calculated?

    Marginal propensity to save is used in Keynesian macroeconomics to quantify the relationship between changes in income and ... Read Full Answer >>
  4. Why should investors research the C-suite executives of a company?

    C-suite executives are essential for creating and enacting overall firm strategy and are therefore an important aspect of ... Read Full Answer >>
  5. How does the always be closing (ABC) strategy benefit a salesperson's sales funnel?

    It is good practice in sales to always be closing, because it's common for a salesperson's sales funnel to be leaky. When ... Read Full Answer >>
  6. How reliable or accurate is marginal analysis?

    Marginal analysis is designed to show how economic reasoning allows actors to accomplish more by understanding limits on ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  2. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  3. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
  4. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
  5. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
  6. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!