QUESTION
Am I legally bound to the terms of a signed retention bonus if the company I signed the bonus with is aquired?
Asked on Dec 09th, 2016 on Corporate Law - California
More details to this question:
I signed a retention bonus for 2 years with a company in Feb 2016. X amount was paid upfront in Feb 2016 and another amount is due to be paid in Feb 2017. However, the terms of the retention bonus state that if I resign with the company before Feb 2018, I need to pay back both payments. The company was aquired and we are now being asked to sign employee agreements with the new company effective Jan 1st. I am not interested in staying with the new company. I am still legally bound to pay the money back if I resign before Feb 2018? Or is the contract now null and void?
1 ANSWER
2 Awards
Issues like the one that you described are typically addressed at some level in the bonus/employment agreement. Based on your question I am assuming that the agreement does not address this issue in any way? It isn't uncommon to include langauge that would allow for you to leave the company under certain circumstances, including a change in ownership and still get to keep the portion of the bonus that has been received. If there isn't language that does so you may be in a position where you have to repay the bonus, but if the acquiring company is asking you to enter a new employment agreement, that may give you an out. Can't say for sure though without reviewing the contracts.
Thanks,Jon
Answered on Dec 12th, 2016 at 2:17 PM