A golden handshake is a large lump sum payment given to an employee upon their termination, often in exchange for their agreement not to sue the company. This payment is typically offered to high-ranking executives or employees in senior positions, and it can be a significant sum of money.
Why are Golden Handshakes Used?
Golden handshakes are used for several reasons, including:
- To incentivize early retirement: Companies may offer golden handshakes to encourage senior employees to retire early, allowing them to bring in new talent and potentially reduce payroll costs.
- To avoid lawsuits: Companies may offer golden handshakes to settle potential legal disputes with departing employees, preventing costly litigation.
- To maintain confidentiality: Golden handshakes may include clauses that require the departing employee to maintain confidentiality about the company's operations or sensitive information.
- To smooth the transition: Companies may use golden handshakes to help departing employees transition to their next career move, especially if they have been with the company for a long time.
Examples of Golden Handshakes
- Executive departures: When a CEO or other high-ranking executive leaves a company, they often receive a large golden handshake as part of their severance package.
- Restructuring or downsizing: Companies that are restructuring or downsizing may offer golden handshakes to employees who are being laid off, especially those in senior positions.
- Mergers and acquisitions: Companies involved in mergers and acquisitions may offer golden handshakes to key employees to ensure a smooth transition and prevent them from leaving the company.
Golden Handshakes in the News
Golden handshakes have often been a topic of discussion in the news, especially when large sums of money are involved. Some people argue that golden handshakes are unfair and that they reward executives who have failed to perform. Others argue that golden handshakes are necessary to attract and retain top talent and to avoid costly lawsuits.
