WHAT IS 'Golden Boot'

A golden boot is a financial package offered to encourage an employee to retire early. Such packages often include cash and stock options.

BREAKING DOWN 'Golden Boot'

Like the better-known golden parachute, a golden boot typically offers a lucrative severance package. Companies seek to encourage retirement to replace highly paid employees for lower-paid new employees or to reduce overhead. Age discrimination in employment matters is largely illegal in the United States, and golden boots can be controversial. They enable companies to reduce costs by eliminating higher paid employees. But they may appear discriminatory when the purpose is to replace veteran employees with lower paid, younger employees. Then there is the golden handshake. It is similar to a golden parachute in that it offers a severance package to an executive when he or she becomes unemployed. While both terms describe severance packages given to such an executive upon termination of duties, a golden handshake goes further to include the severance packages granted executives upon retirement, too.

Signs of reduction in force

Company-wide layoffs start with management decisions, and there are several indicators or decision points that may mean cuts are imminent or necessary. Many companies follow industry performance data along with the actions of their successful competitors, so may follow suit when others make staff cuts, which eventually can lead to industry-wide layoffs. Office leasing is a large expense for most businesses, so may be one of the first line items to be cut before reorganizing labor. If a company reduces leases or sells assets, it may indicate weakening profit margins. Ahead of a poor quarterly earnings report, businesses may seek to cut back on even small expenses. If cautiously frugal turns to abnormal cutbacks on standard business expenses such as travel and supplies, it may indicate a downturn in company fortunes. If a company or its competitors close office locations branches, performance may be under scrutiny. Pay freezes or pay cuts in an industry or within a company and its subsidiaries are flags. Even though these measures may postpone layoffs, they don't always protect workers in cyclical, slow or shrinking industries. When a company is acquired by a similar organization that offers many of the same services, there are bound to be redundant positions with job cuts to follow. Also, management strategies between two companies in a merger may be too different to retain some members of either management team. And, a falling stock price can lead management to promising drastic measures, including layoff, to dissuade shareholders from selling.

RELATED TERMS
  1. Severance Package

    If an employer offers a combination of pay and benefits to workers ...
  2. Golden Handcuffs

    Golden handcuffs are a collection of financial incentives that ...
  3. Boot

    Boot is an accounting term referring to cash or other property ...
  4. Severance Pay

    Severance pay is compensation given to an employee who has been ...
  5. Golden Coffin

    A golden coffin is a death benefit package awarded to the heirs ...
  6. Package Deal

    Package deals allow traders to ensure specific prices or times ...
Related Articles
  1. Retirement

    A Guide to Employee Stock Option Plans

    Stock option plans are among the ways employers can compensate employees. Here's how they work.
  2. Retirement

    Top 5 Crucial Things to Do Before You Retire

    Here are five important things to do before you retire to help you enjoy your golden years.
  3. Small Business

    How a Financial Wellness Program Benefits Your Business

    Offering a financial wellness program to your small business employees can save you money in the long run.
  4. Managing Wealth

    Raises or Bonuses Better for Small Business Staff?

    Weigh the pros and cons of each and strike the right balance to retain a top-tier staff and a healthy bottom line for your business.
  5. Financial Advisor

    Life Insurance Plans to Help Your Small Business Retain Employees

    How to use and design cash value life insurance plans as an incentive to help attract and retain key employees.
  6. Insights

    What Increasing Tech Layoffs Mean For Silicon Valley (YHOO, ADSK)

    Find out the reasons for layoffs by Bay area tech companies in 2016. Learn which factors indicate that the regional job market is still strong.
  7. Retirement

    Is a SIMPLE IRA Right for Your Small Business?

    Here's how small businesses can benefit from offering a SIMPLE IRA to their employees.
  8. Retirement

    The 401(k) and Other Qualified Plans Tutorial

    Learn about eligibility requirements, contributions and distribution rules for these retirement plans.
  9. Managing Wealth

    The layoff payoff: A severance package

    If you must leave your job, go out fighting for the best benefits you can get.
  10. Retirement

    5 Big Companies That Have Cut Out Pension Plans

    Companies are putting the responsibility of saving for retirement on the employee.
RELATED FAQS
  1. What does a merger or acquisition mean for the target company's employees?

    Learn about the likely impact of a merger-and-acquisition deal on the target company's employees, including their benefits ... Read Answer >>
Trading Center