timmyjoe42 Wrote:
I don't understand a contractual bonus. Were these bonuses paid to execs who performed well? If they are getting bonuses for running the company into the ground, then that is sort of ridiculous.
A lot of employee contracts include a section on bonuses. Typically, they will provide for a range as a percentage of salary. The lower end of the range is thus guaranteed and not subject to anything other than staying an employee while anything above that is either up to the discretion of management or based on the achievement of specific outcomes. If there is any benefit to either the company or an employee to have their comp structured this way rather than just bumping up the base salary, I don't know. It is common though.
I don't think that is what these bonuses were. I read a couple of articles that referred to them as retention bonuses. Retention bonuses are often given to key employees when a company is restructuring. The idea behind them is that when employees start to fear that a company is in trouble and that they don't have long term job security, the good employees start to look for other jobs. If all the good employees leave, the company becomes even more troubled. Thus, it can be worth it for a period of time to pay the employees you identify to be your key employees above market wages to get them to agree to stay on during a restructuring period. You can debate the amounts or whether some of these specific people were worth retaining, but the practice itself has some merit.
