What IS a retention bonus and how do I get one?

LONG AGO IN A GALAXY FAR AWAY...

The Empire routinely paid retention bonuses to highly qualified troopers to keep them from going over to the Rebel Alliance. Then, as the Empire began to crumble, it paid "retention bonuses" to troopers even if they left and joined the Alliance.

What's going on here? Have Darth Vader and the Emperor lost their grip? What are retention bonuses anyway, and why is the Empire, er, AIG paying them?

Well, we can't answer all those questions, but we can explain the (legitimate) use of a retention bonus. As aptly defined on WikiAnswers.com:

• A retention bonus is an incentive paid to a key employee to retain them through a critical business cycle. This could be a transitional period (such as mergers and acquisitions) to ensure productivity or to meet a critical milestone. It has proven to be a very good tool in persuading employees to stay.

Let's say your development company is being bought by a competitor and they are going to slowly downsize your company's headquarters staff and take over those functions themselves. They usually cherry pick some knowledgeable staff members from your company and ask them to stay for a while to help close down operations, lay off all those former colleagues, maybe shut down the pension plan and terminate benefit plans. For staying and helping, the competitor pays a bonus to the selected staff who would otherwise be polishing their resumes and looking for new jobs.

That's the legitimate use of a retention bonus. But legitimacy and AIG apparently are oxymoronic.

Pre-retirees can sometimes negotiate a legitimate retention bonus in the period before retirement if they have in-demand skills or knowledge that is vital to an employer.