Definition Golden Parachute. Description.
Golden Parachute is a clause in an executive employment contract
that provides the executive with a lucrative severance package in the event
of their termination, for example in case of a takeover by an acquiring company. May include a continuation of salary, bonus and/or certain
benefits and perquisites, as well as accelerated vesting of stock options.
It can be used as a defensive measure used to prevent hostile
takeovers. With golden parachutes, employers enter into agreements with key
executives and agree to pay amounts in excess of their usual compensation
in the event that control of the employer changes or there is a change in
the ownership of a substantial portion of the employer's assets.
are provided with a financial soft landing in the event that a takeover results
in discharge. An (unwanted) sideeffect of a golden parachute is that executives that have not perfumed well are not being punished.
The company initiating the hostile takeover, on the other hand,
will either have to pay this associated increased costs when acquiring the
corporation or back off from the takeover.
||Cases of Golden Parachutes. Examples
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Golden Parachute Special Interest Group
Integration Approaches |
Golden Handcuff |
Golden Handshake |
Golden Hello |
Employee Benefits |
Employee Stock Ownership
Plan | Employee
Stock Options |
Phantom Stock Plan
| Anti Hostile