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Change of Control Bonus

Change of Control Bonus

  • Term

    Main definition

  • Change of Control Bonus

    A bonus of cash or stock given to one or more members of a management group, typically including the Chief Executive Officer and the Chief Financial Officer, if they successfully negotiate a sale of the company for a price greater than a specified amount.  

    One possible purpose of offering such bonuses is to incentivize management to remain with a company up to the time of sale.  Frequently, management is replaced in connection with a sale of a business.  An incentive for management to complete a sale transaction can help overcome a natural disincentive to take actions that could result in termination of that manager's employment.

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