Golden handcuffs are a system of financial incentives designed to keep an employee from leaving the company. These can include
employee stock optionAn employee stock option is a call option on the common stock of a company, issued as a form of non-cash compensation. Restrictions on the option attempt to align the holder's interest with those of the business' shareholders. If the company's stock rises, holders of options experience a direct...
s which will not vest for several years but are more often contractual obligations to give back lucrative bonuses or other compensation if the employee leaves for another company.
Golden handcuffs are a response by the companies in industries where it is common for highly compensated employees to frequently move from one firm to another, often before the company feels that it has earned a return on the investment in the employee.
Some US courts have held such plans to violate the
Employee Retirement Income Security ActThe Employee Retirement Income Security Act of 1974 is an American federal statute that establishes minimum standards for pension plans in private industry and provides for extensive rules on the federal income tax effects of transactions associated with employee benefit plans...
(ERISA) by failing to vest benefits.
- Serio v. Wachovia 2007 Lexis 63341 (D.
Discussion
Ask a question about 'Golden handcuffs' Start a new discussion about 'Golden handcuffs' Answer questions from other users |
Golden handcuffs are a system of financial incentives designed to keep an employee from leaving the company. These can include
employee stock optionAn employee stock option is a call option on the common stock of a company, issued as a form of non-cash compensation. Restrictions on the option attempt to align the holder's interest with those of the business' shareholders. If the company's stock rises, holders of options experience a direct...
s which will not vest for several years but are more often contractual obligations to give back lucrative bonuses or other compensation if the employee leaves for another company.
Golden handcuffs are a response by the companies in industries where it is common for highly compensated employees to frequently move from one firm to another, often before the company feels that it has earned a return on the investment in the employee.
Some US courts have held such plans to violate the
Employee Retirement Income Security ActThe Employee Retirement Income Security Act of 1974 is an American federal statute that establishes minimum standards for pension plans in private industry and provides for extensive rules on the federal income tax effects of transactions associated with employee benefit plans...
(ERISA) by failing to vest benefits.
- Serio v. Wachovia 2007 Lexis 63341 (D. N.J. 2007)
- Holzer v. Prudential 458 F. Supp. 2d 587 (N.D. Ill. 2006) 2006 Lexis 73049
- McKinsey v. Sentry 986 F. 2d 401 (10th Cir. 1993) 1993 Lexis 2865
- Holansky v. Prudential 2004 Lexis 1419 (N.D. Ill. 2004)
In television, if a host has signed the 'golden handcuffs' deal with the network, it means they cannot appear on any other rival channel. An example of this would be British television hosts
Ant & DecAnthony McPartlin and Declan Donnelly, known collectively as Ant & Dec, are a comedy and presenting duo from Newcastle upon Tyne, England. They are regular presenters on many high-profile ITV1 shows, including I'm A Celebrity...Get Me Out Of Here!, Ant & Dec's Saturday Night Takeaway and...
.
More broadly, the term can also refer to any kind of situation in which a generous salary is used to keep an important employee from looking for a more desirable but less certain position.