Sign On Bonus Agreement

In March 2019, Aaron Rodgers received the highest signing bonus in National Football League history, with $57.5 million. [2] In June 2020, Spencer Torkelson received the largest signing bonus in major league history with $8.4 million. [3] A sign on bonus or sign-up bonus is a sum of money paid to a new employee by a company to encourage them to join that company. [1] They are often given as a way to make a compensation package more attractive to the worker (for example. B if the annual salary is less than they want). It also reduces the risk to the business, as it is a one-time payment; If the employee. B does not meet expectations, the company has not committed to a higher salary. Signing bonuses are often used in professional sports and to recruit graduates for their first jobs. In order to encourage employees to stay in the organization, there are often clauses in the contract that, if it ceases before a certain period of time, the employee must return the signing bonus.

In sports contracts, the total amount of bonuses signed is not always paid immediately, but distributed over time. In such cases, the main difference between a signing bonus and a base salary is that the first is „guaranteed“ money, which means that the team is required to pay the bonus when it is due, even if it reduces the player, unless the player retires or the contract is terminated as a result of a significant violation on the part of the player.

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