I got a sign on bonus when i started a job last year. I resigned after 14 months. Here was the agreement. How much would I have to pay back? "By accepting this offer of employment you understand and agree that if you voluntarily resign or if you are terminated for cause within two (2) years of your hire date, this employment bonus is 100% recoverable during the first year and recoverable on a 12-month prorated basis during the second year."
12 month prorated (12-2)/12= 10/12 of the bonus makes sense, if you resigned after 23 months you'd have to return 1/12th of the bonus
I think you only have to pay 1/2 back. But you'd have to get some lawyers on the case. Clause is: quit/ get sacked within 2 years, some of bonus pay back. a) in first 12 months, full amount back. b) after that, a 12 month pro-rated amount. 12 is half of 24. So a lawyer might be able to twist that for you to say that quitting any time in the 2nd year means you pay back a pro-rated amount of 12 months (and since the total length of time being talked about is 2 years, a 12 month pro-rated amount is 1/2). what heyP said is what the clause MEANS. But hey, if the wording is loose, the wording is loose.
That's 10/12 months son. You only get to keep 1/6th. Gonna mess up your taxes too - I assume you already paid taxes on the whole amount of the bonus, right? Have fun.
^This makes more sense to me. Month 1-12: Pay back 24/24 Month 13: Pay back 11/24 Month 14: Pay back 10/24 Month 15: Pay back 09/24 Month 16: Pay back 08/24 Month 17: Pay back 07/24 Month 18: Pay back 06/24 Month 19: Pay back 05/24 Month 20: Pay back 04/24 Month 21: Pay back 03/24 Month 22: Pay back 02/24 Month 23: Pay back 01/24 Month 24: Pay back 00/24
Got an offer for a job I couldn't turn down. Thanks everyone for the replies. The reason I asked was because I got a letter in the mail saying I owe pretty much the whole amount..which made no sense to me. I think 10/24 makes sense..I will let you all what HR says.
Makes sense to me, sorry. 10/12th. it says "recoverable on a 12-month prorated basis starting year two." it doesn't say 24-month prorated basis. Prorate specifies the denominator -- 12 in this case. You don't go from owing 12/12th on month 12, then 50% on month 13th (10/24th)
dayum is right. reading this letter again..thats what it sounds like. they divided the full amount by 12, and I owe the remaining 10 months. I didn't even the full amount in my hands because of taxes...now what? ugh.
Not that it makes me an expert, but reading the wording as an accountant I agree with what the others are saying in regards to you owing 10/12's of the bonus back. A legal interpretation would give you an exact answer though.
Yes you do - it's called a cliff. It's the same the other way around when vesting stock options. You get nothing until you get past the cliff, e.g. in a 4-year-vesting program with a 1-year cliff, you have vested 0 in month 11, then after month 12, you have vested 12/48 and then you keep vesting pro-rated from there. That is also the interpretation of the clause Sajan presented that I would argue as his lawyer (the other way around).
Sounds like we had the same bonus plan for employees that moved from Chicago to Houston when my company restructured a little over a year ago. I got hired on when they were already in Houston, but I do the accounting for those bonuses. We amortize it over the second year. Since it says 100% in the first year and then "12 month basis during the second year" it sounds like you'd owe back 10/12th of the bonus. We have guys who've been here over a year and just can't quit yet because they either don't want to pay back their bonus, or can't afford to. Let us know what HR says though.
