Golden Coffin

What Is a Golden Coffin?

The term golden coffin alludes to a death benefit package granted to the heirs of high-positioning executives who kick the bucket while still employed with a company. Benefits granted can include unearned salary, accelerated stock options, and insurance proceeds. Provisions of golden coffins are regularly framed in an executive's contract including which benefits are paid, to whom, and for how long after the individual passes on. Albeit these advantages are frequently criticized, defenders say they are rarely paid out.

Figuring out Golden Coffin

High-positioning executives are the main individuals in a company. These experts collectively make up the C-suite and include a company's chief executive officer (CEO), chief financial officer (CFO), and chief operating officer (COO), among others. These individuals are eligible for a number of incentives as part of their compensation packages. These advantages include a base salary and any deferred compensation, which is paid out sometime in the not too distant future for tax purposes. Additionally included are things like stocks, option awards, retirement packages, insurance policies, medical advantages, and other personal benefits such as movement repayments. All that the executive receives is noted in their contract, including the advantages that make up a golden coffin.

Golden coffins have been part of executive compensation for a long time and are commonly conceded to executives of public companies. They basically stretch out certain benefits to the [heirs](/successor to) an executive after they bite the dust. As indicated above, executive contracts typically frame which benefits are paid out by the company and for how long, along with the name and relationship of the heirs. For instance, pay consultants trace one of the earliest golden coffins to Armand Hammer of Occidental Petroleum. His contract called for his salary to be paid to his family until his 99th year, whether he was alive or dead. He passed on at 92 out of 1990.

However not all companies give them, the most common after death benefit is the acceleration of unvested stock options and awards of restricted stock. That's what the reasoning is on the off chance that the executive hadn't passed on, they would likely have remained long enough for the awards to vest. Accelerated unvested stock awards after a death can amount to a huge number of dollars. Some commitment large post mortem severance payouts, supercharged pensions or even a continuation of executives' salaries or bonuses for a really long time after they're dead.

Special Considerations

Executive compensation is a highly contentious issue. It's frequently criticized because executives are quite often incredibly very much compensated when compared to other company employees. This is even more apparent when companies do inadequately. For instance, it isn't uncommon for individuals from the C-suite to be given great packages when their companies end up in the bankruptcy process, while the benefits of different employees are restricted.

The actual amounts that companies consent to pay as part of their golden coffins were revealed solely after a federal rule change in 2006. This change commanded publicly-exchanged companies to uncover the payout figures for executives in case of death. Critics say the practice is a violation of the pay-for-performance principle in which executive compensation is closely tied to that of the company's performance. Death benefits entitle the groups of executives to compensation, even however they play no job in the company's performance. The extraordinary rise in executive salaries, coupled with stock awards and advantages, gives more ammo to golden coffin critics, who claim that executives are as of now very much compensated during their lifetime.

However, advocates of the practice point to the fact that golden coffins are rarely been paid out. This means that they don't affect the company's top line much of the time. They are likewise a modest method to hold ability during the executive's lifetime because it guarantees them that their friends and family will be in capable hands in the afterlife.

Golden Coffins versus Other Golden Perks

Golden coffins are just one of the golden advantages executives might have the option to receive. Most public companies include golden coffins with different types of compensation — when and assuming that executives are terminated, assuming they become disabled, or on the other hand assuming that they retire. Coming up next are a portion of the other most common golden advantages:

Golden Parachute: This is a clause in an executive's contract that guarantees a large payout or severance package should the executive be terminated in the event of a merger, acquisition, or takeover. Subtleties of the payout are given in the executive's contract.
Golden Handshake: This advantage gives an executive a (large) payout on the off chance that they lose their job due to retirement, negligence, or are laid off. Just like some other advantage, terms and conditions of a golden handshake are illustrated in the executive's contract.

Golden parachutes and golden handshakes give benefits to executives would it be advisable for them they lose their jobs due to termination, retirement, or mergers and takeovers.

Illustration of Golden Coffin

Assume Raphael is the 62-year-old CEO of a publicly-exchanged corporation. A golden coffin arrangement is included as part of his employment agreement. Upon Raphael's death, his better half and child are eligible to receive 75% of his $1.5 million salary for the next decade and can vest his substantial stock options worth around $10 million — at the time that the agreement was drawn — right away. Different advantages that might be part of the golden coffin include a car allowance of $150,000 each year and possession of a manor that the company purchased and repaired for him after he was recruited.

Highlights

Critics of golden coffins say the practice is unnecessary and abuses the pay-for-performance principle.
They might include unearned salary, accelerated stock options, and insurance proceeds — subtleties are listed in an executive's contract.
Golden coffins are death benefit packages for the heirs of high-positioning executives.
Defenders say golden coffins are necessary to hold ability and are economical because they are rarely paid out.