Golden handcuffs are contractual clauses that provide financial and non-financial benefits to executives that are forfeited if the executive leaves the company. Organizations use golden handcuffs to disincentivize executives from moving to competitors.
Golden handcuffs refer to a set of financial incentives and benefits offered by an employer to an employee as a way of encouraging them to remain with the company for an extended period of time. These incentives may include stock options, bonuses, deferred compensation, or other benefits that have a significant financial value.
Golden handcuffs are often used to retain high-performing employees who are critical to the success of the company or who possess specialized skills or knowledge that are difficult to replace. The goal is to create a financial disincentive for the employee to leave the company before the incentives have been fully realized.
However, the downside of golden handcuffs is that they may also create a sense of obligation or entrapment for the employee, who may feel compelled to stay with the company even if they are unhappy or if better opportunities arise elsewhere. Golden handcuffs may also restrict an employee's ability to pursue other opportunities, as they may be required to forfeit some or all of their incentives if they leave the company.