# Management incentive plan

A plan setting how much of the upside the managers you keep will share.

[Phantom equity](https://searchspheresource.com/glossary/phantom-equity) and a [retention bonus](https://searchspheresource.com/glossary/retention-bonus) are instruments; this is the plan that decides how large the pool is, who is inside it, and what has to happen before anybody is paid. A first-time owner usually inherits managers who hold the customer relationships and have no reason to stay through a [change of control](https://searchspheresource.com/glossary/change-of-control), and the pool is the answer to that. Size it before the first conversation, because a number offered under pressure becomes the floor for everyone who hears about it, and let the trigger be a specific event: a sale, a refinancing, or a stated multiple reached.

In numbers: A 10% pool on a business bought for $4M is worth $400,000 at the same price, and nothing at all if a sale never happens.

Source: https://searchspheresource.com/glossary/management-incentive-plan
Not dated: A definition is editorial: what a term means, why it matters, and an example. None of it reads a source that can go stale, so there is no date to take and a stamped one would be the build time wearing a costume.

Site index for machines: https://searchspheresource.com/llms.txt