golden parachute(redirected from Golden parachutes)
Also found in: Dictionary, Thesaurus, Legal, Financial, Encyclopedia.
A large severance package given to an executive who is forced to leave a company due to a corporate merger or takeover. Daniel refused to take the position unless the company added a golden parachute clause to his contract.
n. a special kind of severance pay for persons who may be forced to leave a job. (see also golden handcuffs.) If all the golden parachutes were used at the same time, it would bankrupt the company.
An employment agreement that gives generous benefits to its high-ranking executives if they are dismissed owing to a company merger or takeover. This term, dating from about 1980, may have been based on the older golden handshake, which offers an employee generous benefits or a bonus in exchange for early retirement. It dates from the mid-1900s, when a dwindling school population prompted many localities to offer such an incentive to teachers. In contrast, golden handcuffs are a financial incentive to keep an employee from leaving a company. Stock options that can be exercised only far in the future are a popular form of golden handcuffs. This term dates from about 1970.