Golden handshake

Golden handshake is a term used to describe a large financial compensation that is given to an executive who is forced to leave a company due to a merger, takeover, or retirement. This type of payment is often given in addition to the executive's regular pension and can be in the form of cash, stock options, or other benefits.

History

The term "golden handshake" was first used in the early 20th century to describe the large severance packages given to top executives. These packages were often used as a way to entice executives to leave their positions without causing a scandal or damaging the company's reputation. Over time, the term has come to be associated with any large payout given to an executive upon their departure from a company.

Controversy

Golden handshakes have been the subject of controversy and public scrutiny. Critics argue that these payouts are excessive and are not in the best interest of the company's shareholders. They also argue that golden handshakes can create a culture of entitlement among top executives, who may expect large payouts regardless of their performance. However, supporters of golden handshakes argue that they are a necessary tool for attracting and retaining top talent in the corporate world.

Legal aspects

In some jurisdictions, golden handshakes are subject to specific laws and regulations. For example, in the United States, the Sarbanes-Oxley Act of 2002 placed restrictions on the amount of money that a company can pay to an outgoing executive. In the United Kingdom, the Companies Act 2006 requires that any payment made to a director for loss of office must be approved by the company's shareholders.

See also

• Golden parachute
• Severance package
• Executive compensation

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