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All Gold is not the Same - 3/29/2024

Have you heard the phrase Golden Parachute? What about Golden Handcuffs? It's important to understand the differences. While both are gold and related to money for employees all gold is not the same.

Golden Parachutes (GPs) are financially lucrative severance packages which can include bonuses, stock options, and other benefit incentives that are offered to top executives. These are frequently offered if a company is concerned about being bought out or taken over by another company, since the purchasing company often does not retain executives from the purchased company.

Supporters like Golden Parachutes because they feel that GPs make it easier to attract and retain top talent, especially in industries that are more prone to mergers. Opponents dislike GPs because they feel top executives are already well (often excessively) paid and should not be further rewarded for being terminated.

Golden Handcuffs (GHs) are employment incentives (raises, bonuses, stock options, or other benefits) that are designed to encourage valuable employees to remain with a company for a set amount of time or the completion of a particular project. They are used for key employees especially in industries with a lot of job turnover. GHs incentivize employees to remain at their position because of the financial benefits that they would receive when they meet specific milestones.

Supporters like Golden Handcuffs because they feel that GHs help companies keep top talent. The expense in time and money to train new employees is often more expensive than creating bonus systems to retain current employees.

Opponents dislike GHs because they feel that unhappy employees may stay at a position or with a company where they are unhappy just to receive the incentive. This could affect the quality of their work and the whole reason the GHs was offered.

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