What are golden handcuffs?
Coined in 1976, golden handcuffs is a phrase used when financial allurements are offered to employees in a bid to keep them at the company. This financial incentive commonly involves stock options that only vest once the employee stays with the company for several years.
Where have you heard about golden handcuffs?
Golden handcuffs are mostly used for positions that require specialised skills. An example of Golden handcuffs is when Associated Communications (now Teligent) gave Alex Mandl a $20 million signing bonus to become its new CEO, but paid out the money over five years.
What you need to know about golden handcuffs.
Golden handcuffs are most common in industries where highly-compensated employees are likely to regularly switch from company to company. Since employees cost both time and money to train, it makes sense for a company to want to retain their top talent that it has invested in. In addition to stock options that vest gradually, typical arrangements of golden handcuffs include salary reduction and bonus deferrals. For this incentive to be arranged, a legal contract that benefits both the employee and company should be drawn out.
Find out more about golden handcuffs.
Explore similar incentives to golden handcuffs by reading our definition of Golden handshake.