When the companies are crashing left and right and losing literally billions of dollars in this crisis, who gains the most? It’s the top management of these companies! Because most of the Fortune 500 companies have a thing called “golden handshakes” for their top executives.
A golden handshake is a clause in an 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. 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. Wikipedia
CEO’s and top executives of troubled companies have been getting millions of dollars as their compensation for their job loss.
Here is a nice graphical illustration of these statistics. It’s just amazing.
What is your opinion on these compensations, and their amount? Do you think it’s fair? Do you think too much is being given out? Appreciate your feedbacks. I will hold my opinion as not to skew your answers.
P.S. The author wrongly used the phrase “golden parachutes” instead of “golden handshakes”. Golden parachutes refer to the compensations for the job loss by executives due to acquisitions or mergers specifically. However it has been used interchangeably with golden handshakes a lot during this crisis.
What makes me mad is how they still get bonuses even when execs do bad. You can ruin the entire economy and still walk away that year with a multi million dollar bonus.
Insanity.
I get so mad that they’re not even doing too great of a job yet their pay packets keep rising while their company does out with 400 employees because they “can’t afford them”
It may help to understand the purpose of “golden handshake” provisions in CEO employment contracts. These contracts are offered by a corporation to a successful CEO in another company to entice the CEO to come to the corporation. The corporation may be in trouble, or at least worried about its future. For this reason, the CEO wants an assurance that if the corporation doesn’t do well, the CEO will still receive compensation for leaving the CEO’s current employment.
It’s common knowledge, as your post points out, that these “golden handshake” provisions do not always work out as everyone expected. Many times CEOs make out better than the corporation.
The problem is more troublesome when the corporation is receiving taxpayer money, because taxpayers feel that they are paying for the “golden handshakes.”
It is a policy of insanity.
How can they compensate those people with such amount of money while thousands of others fired due to the incapability of those managers? This is really unfair!!
We just had a local company go bankrupt and over 300 people lost their job, it came out that the ceo and board all gave themselves massive pay risers, not a golden handshake but it turned out that way. Not good if you ask me.
Hiya Ades!
In the old days the stockbrokers jumped without any parachutes! These days the people that helped steer the ship into the abyss are receiving huge severance packages, whilst the rats still go down with the ships!
One has to ask if this is the way things should really be working?
This is unjust and wrong! Execs should be held accountable, not given huge severance packages!
This is so unfair to the rest of the employees who loose their jobs. How can they give the provisions of this “golden handshakes” is a company posts a loss of billions? Is the severance pay part of those billions lost? It sucks to learn about this
this recession just sucks for everyone, but maybe it’ll teach the goverment to get their act together
Do you not think that if a company is going bust, it’s unfair that the top executives are unaffected? In theory, the failure of the company could be due to their own actions.. in which case, it’s extremely unfair that they should be paid a huge amount of money regardless!
The continuing saga of The Royal Bank of Scotland former chief execs huge pension fund illustrates just how ridiculous remuneration is.
This guy destroyed a bank and then leaves and now has a $1.8 million pension annually.
Call me old fashioned but I think
If you do well – you get rewarded.
Fail – you get nothing.