Golden Leash
A compensation arrangement where a shareholder provides direct compensation to a director or nominee in exchange for board representation, often used in activist investor situations.
Implications
A financial incentive offered by shareholders to a director to align their interests with those of the shareholders, often used in the context of activist investors who want to ensure that their nominated directors act in the shareholders' best interests.
Example
Example: An activist hedge fund offers a director a golden leash, providing additional compensation based on the performance of the company's stock, ensuring that the director is motivated to advocate for shareholder value.
Related Terms
Different from traditional director compensation, which is usually set by the company, a golden leash is offered directly by shareholders, often tied to specific performance goals or outcomes.
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