Question: The senior management of the company I work for is actively looking for a buyer to take over the company.
As a not-quite-senior-level manager, I am not in a position to take a “change of control” severance payment and retire, but I would like to be rewarded for helping to make the company attractive for a prospective buyer. I think this is reasonable because I am leading the development of a new product.
Is there any type of change of control agreement which would provide a bonus payment on successful take over that does not require the employee to leave the company?
City and State Withheld
Answer: Jonathan, what you seek is not all that unusual, especially for employees who are involved in critical aspects of a company-for-sale’s attractiveness as a target for purchase.
I would describe what you are seeking as a “success fee” or “success bonus” conditioned on the sale of the company. While it is related to a “change of control,” it is not a “change of control” agreement, which is intended to provide job security to executives who might otherwise flee a company that is up for sale, because he or she is afraid of losing his or her job. You are not seeking a payment to stay, or payment for the job you lose, but rather a reward for your good work.
Everything is negotiable, and I would suggest you make a simple, written proposal to your Senior Management regarding (a) your efforts, (b) your hope and intention to make the company a more compelling one to purchase, and (c) your desire to align your own interests with the company’s interests (that is, if the company is successful in its sale efforts, you will also enjoy some of that “success,” yourself.)
You should make it 100% clear that you are not suggesting that you might leave if you do not get the requested agreement. Rather, you should make it clear that you believe that “motivation can make magic,” and we are all motivated – at least in part – by monetary reward. There is nothing to be ashamed about by asking for such a bonus. In fact, most of your Senior Management probably will each get a similar “bonus” by the fact that they each probably own stock in the company that will increase in value if a sale takes place. I’m confident they will understand your request.
People are primarily motivated by self interest. You are, and your Senior Management is, too. If we can set our lives up so that we have “win-win” strategies, we would all do better. If that is all you seek, I strongly support your efforts to respectfully request such a “success fee” or “success bonus.”
If you would like to obtain our Model Memo for Requesting a Bonus – with 12 Good Reasons, just [click here.] Shows “What to Say and How to Say It.”™ Delivered by Email – Instantly!
You don’t need any special kind of agreement. You only need something that says, in effect, “We agree that, if the company is sold within the next 24 months, and if I am working here at that time, I will receive a bonus of $(certain number) no later than the closing of the sale.” And, of course, you and a company officer should sign it.
Thanks for writing in. Hope you will subscribe to our blog’s future postings. It’s free – and worth every penny you pay! Just kidding.
Disappointed with your Bonus? Use our Model Memo Responding to Disappointing Bonus. A favorite! Shows “What to Say, and How to Say It.™ Just [click here.] Delivered by Email – Instantly!
Best, Al Sklover
© 2010 Alan L. Sklover, All Rights Reserved.