Guide to Analysing Companies

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GOLD CARD
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Golden handcuffs
A generous employment contract that persuades managers to
stay with a company for a period of time when they might oth-
erwise have thought of leaving; for example, when a company
is bought by another or otherwise comes under new ownership.
Golden handshake
A generous payment to employees to persuade them to leave a
company without making a fuss, even if they have not com-
pleted their contract. The term can also apply to senior man-
agers who are leaving a company after a successful tenure. Such
managers in the past have been known virtually to write the
terms of their own handshake, which can include perks such as
the use of offices, clubs and other benefits as well as money or
a generous pension.
Golden share
A share with special voting rights that give it peculiar power
vis-a-vis other shares. The term applies particularly to shares re-
tained by a government after a company has been privatised. If
a government wishes to sell off a company in a sensitive indus-
try, such as defence, and yet retain control, it can hold on to a
golden share. This might give it the right, for example, to block
the sale of certain assets or the sale of the company to a
foreign bidder. The beauty of such a share is that, some years
down the road, a government can choose not to exercise it if cir-
cumstances or priorities change.
Golden week
An unusually short working week on the tokyo stock ex-
change which straddles two long holiday weekends.
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Goodwill
The value of a business to another over and above the value of
its assets – that is, the amount that a purchaser is prepared to
pay for the business’s good name, customer base and other ben-
efits as a going concern. Goodwill is generally regarded as an in-
tangible asset and therefore has to be written off over a
period (25 years in the United States or 20 years in the UK, or
less if you choose).
Governance
The government of an organisation, the way in which it is run
and controlled. Financial regulators place great emphasis on es-
tablishing that there is good governance at institutions under
their charge. Such efforts usually centre on ensuring that a
company appoints outside, independent directors, who oversee
its audit committee, preside over the remuneration of the other
directors and see that the board discloses to its shareholders ev-
erything it should. This is often more easily said than done, as
the spate of corporate scandals in the United States in recent
years has shown.
Governments
In the United States, a distinction is sometimes made between
governments and government securities. Governments are
securities (such as treasury bills, bonds and notes) issued
by the central government. They are backed by “the full faith
and credit” of the US government, which means that all its
powers to tax or to borrow can be called upon to repay inter-
est and principal on the loan. Government securities are
also sometimes issued by government agencies such as the
Federal Land Bank. Although these securities are usually highly
rated, they do not have the full faith and credit of the US gov-
ernment behind them.