What are 'Golden Handcuffs'

Golden handcuffs are a collection of financial incentives that are intended to encourage employees to remain with a company for a stipulated period of time. Golden handcuffs are offered by employers to existing employees as a means of holding onto key employees and increasing employee retention rates. Golden handcuffs are common in industries where highly-compensated employees are likely to move from company to company, such as the information technology or hi-tech industry where skills are in demand.

BREAKING DOWN 'Golden Handcuffs'

Employers invest significant resources in the hiring, training and retaining of key employees. Golden handcuffs are intended to help employers hold onto employees that they've invested in. Other forms of golden handcuffs include contractual obligations that specify an action that an employee may or may not perform, such as a contract prohibiting a network television host from appearing on a competing channel, and SERPS – supplemental executive retirement plans - that are funded entirely by the employer.

Golden Handcuffs Example

Examples of golden handcuffs include employee stock options that do not vest until the employee has been with the company for several years, and contractual agreements that stipulate certain bonuses or other forms of compensation that must be returned to the company if the employee leaves before a certain date. Golden handcuffs are financial rewarding packages, but also restrictive because they are designed to prevent key employees from moving to competitors for higher compensation.

RELATED TERMS
  1. Key Employee

    A key employee is a staffer who is a stakeholder with a decision-making ...
  2. Golden Geese

    Golden geese, or a golden goose, is a source of income or profit ...
  3. Revenue Per Employee

    Revenue per employee is an important ratio that looks at a company's ...
  4. Employee Engagement

    Employee engagement is a human resources concept that describes ...
  5. Benefit Allowance

    In place of group health insurance, employers might offer a benefit ...
  6. Stock Compensation

    Stock compensation refers to the practice of giving employees ...
Related Articles
  1. 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.
  2. Retirement

    A Guide to Employee Stock Option Plans

    Stock option plans are among the ways employers can compensate employees. Here's how they work.
  3. Personal Finance

    Financial Wellness Programs: How Employees Benefit

    More and more employees, regardless of age, career or income, are turning to their employers for help with their personal financial plans.
  4. Personal Finance

    Top 10 Companies with the Best Parental Leave Benefits (NFLX, ADBE)

    Ikea just announced it will offer its 13,000 salaried and hourly employees in the U.S. up to four months of paid parental leave. Here are the other companies that offer the best benefits around. ...
  5. 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.
  6. Managing Wealth

    5 Low-Cost Perks for Small Business Employees

    Money isn’t the only way to motivate employees. Here are some savvy strategies even the smallest business can use.
  7. 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.
  8. Financial Advisor

    Understanding Rules on Defined Benefit Pension Plans

    Defined benefit plans offer advantages to both employers and employees. Employers must understand the federal tax rules when establishing these plans.
  9. Financial Advisor

    Why Do Businesses Benefit From Life Insurance on Employees?

    Companies can buy life insurance on their employees and collect the benefit proceeds. Find out why companies want to benefit from the death of their employees.
  10. Managing Wealth

    Top 5 Ways to Retain Your Best Employees

    You need to think beyond salary to make the most talented people want to stay on for the long term.
RELATED FAQS
  1. Can LLCs have employees?

    Discover how limited liability corporations (LLC) can have an unlimited number of employees and the legal steps required ... Read Answer >>
  2. 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