Retaining and incentivising key employees

Retaining and incentivising key employees is an issue that nearly all businesses must confront at certain stages of their development and expansion. Generally, multiple options are available with pros and cons that need to be carefully considered based on the circumstances of the relevant business.

The most commonly used incentives are summarised as below.

Incentive: Cash bonus

Operation

• Employee has contractual right to receive cash bonus based on their individual key performance indicators (KPIs) being achieved, which are usually short to mid-term hurdles
• Employee does not have any ownership of the business

Tax

• Employee is taxed on the cash bonus at their marginal rate