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.
Why should your bank's CEO get a golden parachute while the rest of the bank nose dives?
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.
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.
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.