Science Fair Project Encyclopedia
A golden handshake or golden parachute is a clause in an executive employment contract that provides the executive with a significant severance package in the case that the executive loses their 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.
Typically, "golden handshakes" are offered only to high-ranking executives by major corporations and may entail a value measured in millions of dollars. Golden handshakes are given to offset the risk inherent in taking the new job, since high-ranking executives have a high likelihood of being fired and since a company requiring an outsider to come in at such a high level may be in a precarious financial position.
In more general usage, "golden parachute" has come to signify any deal that - be it through money, another job (usually well-paid but more ceremonial, a sinecure) - makes it easier for an organization to get rid of a high-ranking member without fuss, trouble, protests, or bad press. This may, e.g., be the offer of an ambassadorship (which is considered prestigious and socially desirable) to a minister not wanted anymore in the cabinet, or the promotion of a manager to chairman of the board of an affiliate.
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