What Is a Golden Hello?

The term golden hello refers to a signing bonus offered to executive-level employees. They are usually employed as a way to entice and recruit executives from rival companies. The payment of a golden hello typically comes in the form of a 澳洲幸运5开奖号码历史查询:lump sum cash payment or through installments over a specified period of time w🎉hen an empl✱oyee officially joins the firm.

As with any other type of compensation, golden hellos are subject to taxation. Golden hellos became subject to scrutiny, especially after the financial crisis that led to the 澳洲幸运5开奖号码历史查询:Great Recession.

How Golden Hellos Work

Companies use different strategies and tactics to attract the best possible talent. This may c🉐ome in the form of certain benefits (such as paid healthcare and extra paid time off) or generous compensation packages. Some of these packages may include large signing bonuses, which are called golden hellos.

Golden hellos are usually offered to high-level employees, such as management and ex🐟ecutive staff. They are commonly used as a way to entice (successful) individuals to leave a rival company and join another. These bonuses have been common in certain sectors, particularly:

• Technology
• Finance
• Consulting companies

The hope of offering a golden hello is generally that the new employee's value and knowledge would exceed the cost of the bonus. Luring them away from the competition would hopefully, thus, benefit the offering organization.

Depending on the industry and the size of a company, a golden hello may run into millions of dollars. This signing premium is a calculated risk by the hiring company. The prevalence and size of golden hellos reflected a robust 澳洲幸运5开奖号码历史查询:labor market prior to the 澳洲幸运5开奖号码历史查询:2007-2008 financial crisis.

These lucrative bonuses served as a way to distinguish one employer from another in competitive industries. But they became less commonplace as people began to scrutinize and criticize these large payouts.

Special Considerations

Golden hellos are subject to taxation just like any other type of compensation. The amount of tax owed is assessed at the time of receipt and based on the amount received. For those who work in the U.S., the Internal Revenue Service (IRS) requires employers to tax the sum as supplemental wages.

For golden hello payments under $1 million, this tax rate could be as high as 22% of the total bonus. The IRS does allow the employer some flexibility, and the employee may see some savings when reporting the amount with regular wages. Those who receive a larger golden hello can expect to have the amount over $1 million taxed at 37% or the highest rate for the year.

Criticism of Golden Hellos

Golden hellos and other types of signing bonuses were very common before the Great Recession. They a🦹llowed companies to attract and acquire talent, usually from their competitors. These indivi♚duals were also often paid hefty salaries to match the other incentives they were given to join.

However, executive pay packages became heavily scrutinized and criticized more intently after the financial crisis. This was especially true since golden hellos didn't necessarily mea🥀n that a company would succeed, leading to heavier financial burdens and strains.

Shareholder support and public acceptance of such forms of payment also came under fire. As such, corporate boards are now much more conscious of their bottom lines and the impression these big-dollar compensation packages convey, both internally and externally.

Example of a Golden Hello

Company ABC is a 25-year-old tech com🐼pany that has been struggling to remain competitive in the market, with revenues decreasing for the past five years. One of its biggest competitors is Company XYZ, whose CEO has driven significant growth in the company for the last 10 years.

Company ABC's shareholders would like to replace their current CEO and ideally would like to replace him with the CEO of Company XYZ. Company ABC approaches the CEO of XYZ with a golden hello offer; an extremely large signing bonus for joining the company. ABC also offers the candidate other perks and incentives to join. Given the large pay package as well as the opportunities of turning around ABC, the candidate takes the offer.

The Bottom Line

The world of business is competitive and the executives of companies are paid extremely well to grow their companies and maximize profits. To remain competitive, many companies seek to hire the best executives they can. One way to entice executives, especially those of competitor firms, is to offer them large salaries and perks, one of which comes in the form of a signing bonus known as a golden hello.