Golden Handshake

• Golden Handshake

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Corporate governance Diffuse shareholders

1 It is often assumed that, if institutional investors pressing for

will likely be costly because of "golden handshakes" or the effort required, they will simply sell out

their interest.


Employee benefit United States

1 Normally, employer-provided benefits are tax-deductible to the employer and non-taxable to the employee. The exception to the general rule

includes certain executive benefits (e.g. golden handshake and golden

parachute plans).


Takeover - Agency Problems

1 the takeover artist. The former top executive is then rewarded with a

golden handshake for presiding over


Synopsys - Acquisitions, mergers, spinoffs

1 To acquire Avanti, Synopsys paid about $55 million in golden

handshake payments to these same executives


Golden handshake

1 A 'golden handshake' is a clause in an corporate officer|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.

[http://www.investopedia.com/terms/g/golden-handshake.asp#axzz1yqGBZeM6] This can be in

the form of cash, share (finance)|equity, and other benefits, and is often accompanied by an

accelerated vesting of stock options


Golden handshake

1 golden handshake is similar to, but more generous than a golden parachute because it

not only provides monetary compensation and/or stock options at the termination of

employment, it includes the same severance packages executives would get at retirement.[http://www.investopedia.com/ask/answers/0

9/difference-between-golden-handshake-parachute.asp#axzz1yqGBZeM6 What's the difference between a golden handshake and

a golden parachute?] investopedia.com


Golden handshake

1 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


Golden handshake - Perverse incentives

1 Golden handshakes may create perverse incentives for top

executives to facilitate the sale of the company they are managing by

artificially reducing its stock price.



1 The former top executive is then rewarded with a golden handshake for presiding over the firesale that

can sometimes be in the hundreds of millions of dollars for one or two

years of work.



1 (This is nevertheless an excellent bargain for the takeover artist, who

will tend to benefit from developing a reputation of being very generous to parting top executives). This is just

one example of some of the principal-agent / perverse incentive

issues involved with golden handshakes and golden parachutes.


Golden parachute

1 also known as Change-in-control benefits.[http://www.deallawwire.com/2012/04/05/golden-

parachutes-on-the-rise-during-down-economy/ Golden parachutes on the rise during down economy] by Éric

L’Italien, Lawyer, Norton Rose Canada| Deal Law Wire| 5 April 2012 But more recently the term has been used to describe perceived excessive CEO (and other executives) severance

packages unrelated to change in ownership (also known as a Golden

handshake).[http://www.usatoday.com/money/companies/management/story/2011-11-07/100-million-dollar-chairmen/51116304/1 CEOs' golden parachute exit packages pass

$100 million] By Gary Strauss, USA TODAY 11/8/2011 The benefits may include severance pay, cash bonuses, stock

options, or other benefits.


Accounting scandals - Causes

1 The former top executive is then rewarded with a golden handshake for presiding over the firesale that

can sometimes be in the hundreds of millions of dollars for one or two

years of work


Rhodesian Special Air Service - Re-formation in Rhodesia

1 With the breakup of the Federation at the end of 1963, the Squadron was virtually destroyed by many taking the golden handshake and some remaining in Northern Rhodesia

which included all the officers and the OC at that time


Perquisite - United States

1 Normally, employer-provided benefits are tax-deductible to the employer and non-taxable to the employee. The exception to the general rule includes certain corporate officer|

executive benefits (e.g. golden handshake and golden parachute

plans) or those that exceed federal or state tax-exemption standards.


Amnesty International - Charitable Status

1 In the UK Amnesty International has two principal arms, Amnesty International UK

and Amnesty International Charity Ltd. Both are UK-based organisations but only the

latter is a charity.[http://www.thirdsector.co.uk/news/1

057803/?DCMP=ILC-SEARCH Ainsworth, David (2011) Amnesty issues public apology

over golden handshakes, Third Sector Online, 1 March] (Accessed August 2012)


Finmeccanica - History

1 In 2011 the company faced accusations that it had created slush funds with which to bribe politicians

and chairman Pier Francesco Guarguaglini came under

investigation. He denied any wrongdoing but, following pressure from Prime Minister Mario Monti, he

stepped down from his post on 1 December receiving a golden handshake of 4 million Euros.


National Pension (Japan) - Lump sum withdrawal payments

1 The reason for the lump sum not increasing after 36 months of paying into the pension

scheme are unclear, but may relate to the JET Programme, where young foreign graduates

come to Japan to teach English in public schools.The Japan Times

[http://search.japantimes.co.jp/cgi-bin/fl20040810zg.html Your Golden Handshake, August 10th

2004] Retrieved on January 21st 2011 Until 2006, JET participants could only work in the

program for three years and it appears the lump sum rules were crafted with this in mind.


Jean Chrétien - Legacy

1 Chrétien was repeatedly attacked by both his opponents and supporters for failing to live up to key election

promises, such as eliminating the so-called golden handshake by which

politicians receive a substantial life-time pension after serving a mere

five years in elected office


Irish Times - Diversification

1 She dismissed suggestions that she would receive a significant golden

handshake, saying that her package would be nothing out of the ordinary

at all


Captain Pugwash - History

1 A number of spin-off books were written by John Ryan, who in the 1980s drew three new Pugwash

comic-strip storybooks: The Secret of the San Fiasco, The Battle of Bunkum

Bay and The Quest for the Golden Handshake.


Hugh Carleton Greene - Wartime and post-war work

1 Days after his promotion, Greene made arrangements for Hole to

receive a golden handshake for early retirement


Jacques Nasser - Career at Ford

1 Despite this Nasser received a US$17

million golden handshake when he

lefthttps://store.theartofservice.com/the-golden-handshake-toolkit.html

Ganari Takahashi - Agriculture

1 Takahashi retired from SOD at the end of fiscal year 2005 (March) and used the 1 billion yen (about $10

million) golden handshake he received to purchase a farm in

suburban Tokyo which would provide fresh produce to be served at his

nearby restaurant


R. J. Reynolds Tobacco Company - RJR Nabisco

1 Ross Johnson US$53,800,000 as part of a golden handshake clause, the largest such deal in history at the

time, as severance compensation for his acceptance of the KKR takeover


Cardinia Transit - History

1 Cardinia Transit was formed in June 1996 when Grenda Corporation purchased Berwick Bus Lines and

amalgamated them with Grenda's Bus Services' Pakenham, Victoria|Pakenham depot.Cardinia Transit

Australian Bus Panorama 12/1 August 1996 page 36 It was included in the sale of Grenda Corporation to

Ventura Bus Lines in November 2011.[http://www.grenda.com.au/news/latest-news/grend

a-announcement-18112011 Grenda Announcement 18/11/2011] Grenda Corporation 18 November

2011[http://www.theaustralian.com.au/news/features/the-man-with-the-golden-handshake/story-e6frg8h6-

1226292128380 The man with the golden handshake] The Australian 10 March 2012


Invicta Bus Services - History

1 Invicta was acquired by the Grenda Corporation in March 2009. It was included in the sale of Grenda

Corporation to Ventura Bus Lines in November 2011.[http://www.grenda.com.au/news/latest-

news/grenda-announcement-18112011 Grenda Announcement 18/11/2011] Grenda Corporation

18 November 2011[http://www.theaustralian.com.au/news/featu

res/the-man-with-the-golden-handshake/story-e6frg8h6-1226292128380 The man with the

golden handshake] The Australian 10 March 2012


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Golden Handshake