Considerations in Issuing Retention Grants

Considerations in Issuing Retention GrantsZoom inDownload PDF

To issue a retention grant or not? And how generously? Have you struggled with these questions recently?

You should have, and for good reasons: the loss of key officers can shake investor confidence, and worse, jeopardize the execution of a company’s strategy and ability to perform.

Retention grants can offer cheap insurance against executive flight. What might cost a few million in pay can protect hundreds of millions in revenue, or even more in market cap.

Here’s the catch: Retention grants are overprescribed. Many either a) mistakenly attempt to address problems that cannot be solved with cash or stock awards, or b) are unnecessary because the retention risk is much smaller than perceived.

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