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.

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