Change of Control Bonus
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Term
Main definition
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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.
