Entry in progress—B.P.
Wikipedia; Golden handshake
A golden handshake is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses his or her job through firing, restructuring, or even scheduled retirement. This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options.
The term originated in Britain in the mid 1960’s. It was first coined by the city editor of the Daily Express, Frederick Ellis.
Typically, “golden handshakes” are offered only to high-ranking executives by major corporations and may entail a value measured in millions of dollars. Golden handshakes are given to offset the risk inherent in taking the new job, since high-ranking executives have a high likelihood of being fired and since a company requiring an outsider to come in at such a high level may be in a precarious financial position. Their use has caused some investors concern since they do not specify that the executive had to perform well. In some high-profile instances, executives cashed in their stock options, while under their stewardship their companies lost millions of dollars and thousands of workers were laid off.
Golden handshakes may create perverse incentives for top executives to facilitate the sale of the company they are managing by artificially reducing its stock price.
What Does Golden Handshake Mean?
A stipulation in an employment agreement which states that the employer will provide a significant severance package if the employee loses their job. A golden handshake is usually provided to top executives for loss of employment through layoffs, firing or even retirement. Payment can be made several ways, such as cash, or stock options.
A large payment made by a company to a senior executive upon termination of employment before his/her contract ends.
The Free Dictionary
(Business / Industrial Relations & HR Terms) Informal a sum of money, usually large, given to an employee, either on retirement in recognition of long or excellent service or as compensation for loss of employment
(Oxford English Dictionary)
golden handshake n. a gratuity given as compensation for dismissal or compulsory retirement; also transf.
1960 Economist 9 Apr. 179/2 There is little public sympathy for the tycoon who retires with a *golden handshake to the hobby farm.
1960 Times 8 July 13/2 On the financial side, Cyprus receives its golden handshake of over £14 m.
1969 ‘B. Graeme’ Blind Date i. 13, I knew there would be no future in the Forces.‥ So I came out, and have been living on the golden handshake ever since.
New York City • Banking/Finance/Insurance • (1) Comments • Monday, February 21, 2011 • Permalink