NEW YORK, Dec. 19, 2013 /PRNewswire/ -- "Golden perks have no place in a company whose objective is pay-for-performance," says executive compensation expert Bruce R. Ellig. "Even worse is when executives receive these golden benefits while reducing employment and/or seeking employee pay givebacks."
Mr. Ellig is the author of the third edition of The Complete Guide to Executive Compensation, which will be published on December 27, 2013.
"Boards and their compensation committees should be prepared to justify to shareholders in their proxy statement any of the following 'golden' executive benefits:"
- Golden boot (or golden goodbye): Severance pay beyond that specified in an employment agreement to soften the impact of employment termination.
- Golden bungee: A combination of golden handcuff and golden parachute.
- Golden carrot: A generous incentive program.
- Golden coffin: Stipulated amounts to be paid to the executive's estate upon individual's death.
- Golden handcuff: A deferred cash and/or stock payment that is hoped will keep the individual from leaving the company.
- Golden handshake: An employment contract specifying salary, guaranteed bonus, stock options, special perquisites, and severance pay for terminating the contract.
- Golden hello: A front-loaded pay package (typically with restricted stock) to offset the individual's financial loss for leaving his or her current employer (also known as an acceptance award or bonus).
- Golden hook: Similar to a golden hello, or sign-on bonus, it is a payment at the beginning rather than at the end of a period of service. Most common use is in conjunction with an employment offer, including cash equivalent of forfeited payment.
- Golden hug: A specified payment for staying with the company for a stated period of time – usually initiated when the company is facing bankruptcy or other troubled times (sometimes paid without the person losing employment).
- Golden parachute: A severance package to selected individuals, typically based on a significant portion of the company being purchased by someone else (also known as change of control). It is more liberal than a silver parachute but less liberal than a platinum parachute.
- Golden passport: Degree from a prestigious college or university and/or experience from a highly qualified employer.
- Golden safe: Deferred compensation that is secured from general creditors – typically implemented when the company is facing bankruptcy.
"These company Christmas gifts for top executives are often worth their weight in gold. But there should be no room for gold in executive stockings – maybe some coal."
About Bruce Ellig
Bruce R. Ellig is a noted authority on executive compensation with more than 35 years of experience. Before retirement, he worked at Pfizer Inc. for 12 years as corporate vice president and head of worldwide HR, reporting directly to the chairman and CEO. During this period, he also served as secretary to the board's compensation committee, in addition to being a member of the internal compensation committee, headed by the chairman and CEO. Mr. Ellig has served on several boards of directors (both for-profit and not-for-profit), including as chairman of the national board of directors of The Society for Human Resource Management (SHRM). He also served on several advisory boards and was a member of numerous premier HR organizations. He is a frequent speaker, and author of well over 100 articles and eight books. Mr. Ellig's expertise has been recognized by his professional peers with numerous honors and awards including several "Man of the Year" awards and the prestigious Lifetime Achievement Award from SHRM and WorldatWork. He was elected to the National Academy of Human Resources in 1993, a year after its formation. Mr. Ellig received the Distinguished Business Alumni Award from the University of Wisconsin where he earned his BBA and MBA and was elected to Beta Gamma Sigma and Phi Beta Kappa.
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