They go further, knowing that rich pay will seldom be the sole motivator for true talent. More on this at Inspiring Talent . Another handcuff may come in the form of a retention bonus that is cleverly coupled with a repayment feature and a non-competition agreement. The strategy is not so much collecting of repayment as creating direct loss and risk if the executive violates the non-compete. A vesting schedule is the most common.
Future service is the usual condition, although performance conditions are sometimes attached too.
The problem with vesting begins when the conditions are satisfied. At that point, the executive is vested and no longer at risk. Future service schedules that extend to retirement age might seem like the logical answer, but they both dilute the value of vested benefits and are time-bombs under the golden parachute tax rules. The high impact method involves asking an executive to sign a written non-competition agreement. The low impact alternative does not involve any written agreement.