compensation for loss of office

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A payment, often tax-free, made by a company to a director, senior executive, or consultant who is forced to retire before the expiry of a service contract, as a result of a merger, takeover, or any other reason. This form of severance pay (see also redundancy) may be additional to a retirement pension or in place of it; it must also be shown separately in the company's accounts. Because these payments can be very large, they are known as golden handshakes. See also golden parachute.

Subjects: Financial Institutions and Services.

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