A Bad Boss Bonus?

Today's news about Twitter's sale and the tidying up of its executive suite highlights a little-discussed and poorly understood compensation practice: the retention bonus. A key feature in the mergers and acquisition context, these financial inducements are aimed at keeping employees in their seats in the face of corporate insecurity that naturally results when employees learn that management is about to be reshuffled (or shuffled out). The purpose of a retention bonus is to reward employees facing employment insecurity who stick with a business in acquisition play. The hope of course is that these employees will keep the target in shape until the acquisition is completed. There is nothing legally or morally wrong with retention bonuses which, like many compensation methods, if crafted properly will incentivize employees to continue to do good work until the new owners decide if and where employees fit with future plans. But retention bonuses can serve other purposes,