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 their job through firing, restructuring, or even scheduled retirement.[1] This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options. According to Investopedia, a golden handshake is similar to, but more generous than a golden parachute because it not only provides monetary compensation and/or stock options at the termination of employment, but also includes the same severance packages executives would get at retirement.[2]
The term originated in Britain in the mid-1960s. It was coined by the city editor of the Daily Express, Frederick Ellis.[3] It later gained currency in New Zealand in the late 1990s over the controversial departures of various state sector executives.[4][5]
"Golden handshakes" are typically 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[citation needed] 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 has 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.[examples needed]
^"Golden Handshake Definition".
^What's the difference between a golden handshake and a golden parachute? investopedia.com
^Cryer, Max (2010). Who Said That First. Exisle Publishing Limited. p. 113.
^"PM criticises Lotto king's pay". The New Zealand Herald. 31 August 1999.
^"Severance payout, trips probed". The New Zealand Herald. 17 June 1999.
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2000). "Weah joins Royle's revolution". The Independent. "Weah snubs goldenhandshake". BBC Sport. 19 August 2000. Nixon, Alan (17 October 2000). "Weah's...
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(quoting Larry Ellison)". CBS News. Retrieved August 23, 2012. "Amelio's goldenhandshake". CNet News. July 9, 1997. Retrieved October 25, 2013. Chaffin, Bryan...
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popular or trending activity Goldenhandshake Contract clause which richly rewards a key employee in the case of termination Golden parachute Contract clause...
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to the general rule includes certain executive benefits (e.g. goldenhandshake and golden parachute plans) or those that exceed federal or state tax-exemption...