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The Secret World of Golden Handshakes: What Are They?

06/04/2023 by
The Marketing Team
In the corporate world, executives and top-level employees are often offered various incentives to join or leave a company. One such incentive is the golden handshake. This practice has gained a lot of attention in recent years, both positive and negative. In this Business Kitz article, we will discuss what a golden handshake is, its […]

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In the corporate world, executives and top-level employees are often offered various incentives to join or leave a company. One such incentive is the golden handshake. This practice has gained a lot of attention in recent years, both positive and negative. In this Business Kitz article, we will discuss what a golden handshake is, its components, eligibility criteria, and the implications it has on the company and employees.

Definition of a 'golden handshake'

A golden handshake is a financial incentive given to an executive or senior-level employee when they leave a company. It is a type of severance package that is offered as a token of appreciation for the employee's services to the company. This incentive is usually offered in addition to other benefits such as pension, retirement plans, and other financial rewards. A golden handshake is typically given in the form of a lump sum payment, but it can also be paid in instalments over a period of time.

What is included in a golden handshake?

A golden handshake package can include various components, including a severance payment, stock options, medical benefits, and other financial rewards. The amount of the package depends on the employee's position, tenure, and the company's policies. The package may also be influenced by the employee's performance, such as the amount of revenue they have generated for the company.

What is the eligibility for a golden handshake?

Golden handshakes are typically offered to executives or senior-level employees who are leaving the company. The eligibility criteria for a golden handshake vary depending on the company's policies, but typically it is offered to employees who have been with the company for a certain number of years or have achieved a certain level of success. This incentive is typically offered to employees who are leaving the company due to retirement, resignation, or termination.

What are the implications of golden handshakes?

Golden handshakes have both positive and negative implications for both the company and the employees. On the positive side, a golden handshake is a way for the company to show its appreciation for the employee's services and loyalty to the company. It can also be a way for the company to maintain good relations with the employee and ensure a smooth transition of power.

On the negative side, a golden handshake can be seen as a waste of company resources, especially if the employee has not been successful in their role. It can also be viewed as a way to incentivise executives to make decisions that benefit themselves rather than the company. This is because an executive who knows they will receive a golden handshake may be more likely to make decisions that will lead to short-term gains rather than long-term benefits for the company.

Final thoughts

Golden handshakes are a financial incentive offered to executives and senior-level employees when they leave a company. The package typically includes a severance payment, stock options, medical benefits, and other financial rewards. The eligibility criteria and the package's components vary depending on the company's policies and the employee's tenure and success. While a golden handshake can be a way for the company to show its appreciation for the employee, it can also have negative implications. Therefore, it is crucial for companies to carefully consider the implications of offering golden handshakes before doing so.

Legal advice

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About
The Marketing Team
Business Kitz Marketing team are experts in their field. You can expect the best business guides and updates on employment law here.

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