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Golden Handshake

A golden handshake is a financial arrangement offered to executives and senior employees, providing a significant severance package upon their departure from a company. This package often includes cash payments, stock options, or other benefits designed to make the transition smooth. Golden handshakes are typically offered during retirement, voluntary resignation, or forced termination, particularly when a company seeks to part ways amicably with high-ranking employees.

Example

A CEO retiring after 20 years of service receives a golden handshake worth millions in cash and stock options, rewarding their tenure and facilitating a smooth exit.

Key points

• A generous severance package offered to executives upon departure.

• Includes cash payments, stock options, and other benefits.

• Commonly used to ensure amicable exits for senior employees.

Quick Answers to Curious Questions

To ensure a smooth transition, reward executives for their service, and avoid potential conflicts or lawsuits related to their departure.

Critics argue that they can be excessive and reward executives even in cases of poor performance, raising concerns about corporate governance and accountability.

Large payouts can impact a company’s financial position, especially if multiple high-value packages are awarded during leadership changes.