Golden Hand Shake

It is one way to retrench the employee, a way to reduce staff or downsize human resources. 

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 his or her job through firing, restructuring, or even scheduled retirement. This can be in the form of cash, equity, and other benefits, and is often accompanied by an accelerated vesting of stock options.

https://youtu.be/k266Ra81aR8

The term “Golden Handshake” is often used to describe a generous and substantial financial package that may include various benefits such as:

1. Severance Pay: A lump-sum payment or multiple months’ worth of salary and bonuses to provide financial support during the transition period.
2. Stock Options: Acceleration of vesting or immediate exercise of stock options, allowing the employee to cash in on their vested shares.
3. Pension and Retirement Benefits: Enhanced pension contributions or early access to retirement funds.
4. Health and Insurance Benefits: Continued coverage of health insurance and other benefits for a specified period.
5. Bonus Payouts: Prorated or full bonus payment, even if the employee’s departure date falls before the regular bonus payout date.
6. Job Placement Assistance: Help with finding a new job, career coaching, or networking support.

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While Golden Handshakes are often seen as a way to attract and retain top executives, they have also faced criticism for excessive payouts, especially in cases where executives may receive substantial compensation even when they have underperformed in their roles.

It’s worth noting that Golden Handshakes can differ significantly from one company to another, and they are subject to various regulations and guidelines depending on the country and industry practices.

Link with Voluntary Retirement.