Golden Parachute

A large payout promised to executives if they lose their jobs after a takeover.

A golden parachute is a contract clause granting senior executives substantial compensation — cash, stock acceleration, benefits — if the company is acquired and they're pushed out. Defenders argue it keeps executives from fighting value-creating takeovers just to save their jobs; critics see pay for failure. The sums can be striking: nine-figure packages have accompanied executives out the door of acquired companies. Shareholders now get advisory votes on many such packages, though the votes rarely stop them.

The CEO's golden parachute guaranteed three years' salary and instant vesting of all stock awards if the merger closed.