golden parachute

(redirected from a golden parachute)

golden parachute

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.
See also: golden, parachute

golden parachute

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.
See also: golden, parachute

golden parachute

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.
See also: golden, parachute
References in periodicals archive ?
The survey indicated a decline in use of a golden parachute clause by 10 percent, which was second to non-solicitation clause, down 17.5 percent.
"Why should your bank's CEO get a golden parachute while the rest of the bank nose dives?" asked the copy.
A golden parachute plan is generally a compensation arrangement that provides special severance benefits to executives in the event that the corporation changes ownership and the covered executives are terminated.
For an executive, a golden parachute is a very good severance package.
WHEN energy boss Sir Richard Giordano left energy outfit BG group, he didn't just get a golden parachute but an office to match.
Under IRC section 280G, a golden parachute payment is one made to a disqualified individual (executive) contingent on a change in ownership of the business and greater than three times the individual's base compensation.
at 35,000 feet above the earth with a golden parachute.
A parachute payment is considered to be conditioned on a change in ownership or control if the payment would not have been made to the disqualified individual if no change in ownership or control had occurred; the existence of additional justifications for the payment will not save the agreement from being designated a golden parachute.
A written agreement does not have to exist for a payment to be classified as a golden parachute.
By late 1985, Anderson's main concerns had shifted to fighting off a hostile corporate raider and nailing down a golden parachute for himself.
WHEN energy boss Sir Richard Giordano left BG Group, he didn't just get a golden parachute but an office to match.
The IRS did specify four types of payments that would not be considered part of a golden parachute and would not be subject to penalty, regardless of their size.
"And while that's significant, it understates the real cost because the employer can't deduct any of the dollars subjected to the excise tax." (see "Golden Parachute Costs Can Skyrocket".) Golden Parachute Costs Can Skyrocket Can employers really end up spending more than $3 for every $1 of benefits they award to departing executives in the form of a golden parachute? At the margin, absolutely.
CPAs can build cost-savings into the design of a golden parachute agreement, while they can use other techniques retroactively once a parachute payment has been triggered.