Golden parachute
Meaning
A "golden parachute" is a substantial financial compensation package guaranteed to an executive in the event of job loss following a merger, acquisition, or termination.
Origin
The term "golden parachute" soared into the business lexicon during the tumultuous corporate takeover climate of the late 1970s and 1980s. Faced with hostile acquisitions, company boards sought ways to protect their top executives, offering lucrative severance agreements as a safeguard against sudden job loss. The "parachute" vividly captured the idea of a safe, cushioned landing for an executive ejected from their position, while "golden" underscored the immense financial wealth involved, often millions of dollars. It quickly became a controversial symbol of executive compensation, sparking debates about fairness and corporate accountability as it promised a soft landing even when companies faced hard times.
Examples
- The CEO negotiated a massive golden parachute, ensuring his financial security even if the company was sold.
- Shareholders were outraged by the size of the executive's golden parachute, especially given the company's poor performance.