golden parachute


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Related to golden parachute: greenmail, poison pill, Silver 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 case does clarify that post-acquisition employment contracts may generate golden parachute payments.
Hypothesis 3: Ceteris paribus, the greater a firm's takeover susceptibility (the lower a firm's EXCESS value), the greater the likelihood is that the CEO will have a golden parachute.
The NCUA's proposal to limit golden parachutes and indemnification payments is overbroad and would place unnecessary restrictions on credit union boards, according to comment letters filed by CUNA and NAFCU.
Given the gargantuan size of some golden parachutes, perhaps a more appropriate headline would read: "Want a really big bonus?
For the $1 million cap under IRC section 162(m) and golden parachute payments, the service will ensure proper compliance with statutory limits and regulations.
At least 35 companies have added language to their mission statements stipulating that any executive who negotiates a merger or buyout while in a goose blind automatically forfeits his stock options and golden parachute.
This is mandatory, or the CEO will be dangling from his or her golden parachute in short order.
In their discussion of the loss disallowance rules, the built-in loss rules, and numerous other rules (from the special rules relating to groups including life insurance companies to the depreciation deduction to the safe harbor leases and golden parachute payments), the authors provide much needed assistance.
NCUA Attorney Pamela Yu said there are exemptions to the golden parachute rules to allow for previously agreed to deferred compensation plans and legitimate "nondiscriminatory" severance pay plans.
The Wanstead MP has announced that he will retire at the next election but his golden parachute payment of pounds 64,766 is being withheld.
Why should your bank's CEO get a golden parachute while the rest of the bank nose dives?