Golden handcuffs

Golden handcuffs are a system of financial incentives designed to keep an employee from leaving the company. These can include employee stock options which will not vest for several years but are more often contractual obligations to give back lucrative bonuses or other compensation if the employee leaves for another company.

In Business

Golden handcuffs are a response by the companies in industries where it is common for highly compensated employees to frequently move from one firm to another, often before the company feels that it has earned a return on the investment in the employee.

Some US courts have held such plans to violate the Employee Retirement Income Security Act (ERISA) by failing to vest benefits.

• Serio v. Wachovia 2007 Lexis 63341 (D. N.J. 2007)
• Holzer v. Prudential 458 F. Supp. 2d 587 (N.D. Ill. 2006) 2006 Lexis 73049
• McKinsey v. Sentry 986 F. 2d 401 (10th Cir. 1993) 1993 Lexis 2865
• Holansky v. Prudential 2004 Lexis 1419 (N.D. Ill. 2004)

In television, if a host has signed the 'golden handcuffs' deal with the network, it means they cannot appear on any other rival channel. An example of this would be British television hosts Ant & Dec.

More broadly, the term can also refer to any kind of situation in which a generous salary is used to keep an important employee from looking for a more desirable but less certain position.

In Programming

The Golden Handcuffs also refer to a rule used by freelance programmers to get money from people that hire them to build software programs. Here's how the Golden Handcuffs work: You hire somebody to write a program for you, and the programmer takes your money. Then that person writes a program that doesn't work exactly the way you intended. Rather than lose the money you previously invested in developing the program, you pay the programmer more money, and then this programmer develops a new version of your program that doesn't work. At this point, you're handcuffed. Do you keep paying money to a programmer who never completely finishes the job, or do you give up altogether? What's worse, you can't hire a new programmer to work on the same program because the original programmer owns your program's source code, so nobody else can modify it. Thus the only way that you can modify the program is to hire the original programmer again and again and again.

See also

• Golden handshake
• Golden parachute