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.