Browse Definitions :
Definition

golden parachute

A golden parachute is a clause in a severance agreement that provides an executive with a substantial package upon termination, usually in the event of a takeover or merger. 

Such a package might include severance pay, bonuses and stock options, among other possibilities. A golden parachute is more formally known as "change in control benefits."

Proponents of golden parachutes maintain that they are crucial for attracting the best executive candidates. Opponents, on the other hand, argue that the agreements may influence executives to use unscrupulous means to try to bring about a takeover or merger so they can collect. A study from Harvard's John M. Olin Center for Law, Economics and Business, titled "Golden parachutes and the wealth of shareholders," found that corporations that provided golden parachutes were more likely to be acquired and to have a lower market value and share price.

According to the Dodd-Frank Act, corporations must have shareholders vote on potential golden parachute pay-outs separately from other issues related to any merger or sale. 

See also: voluntary severance package

This was last updated in July 2013

Continue Reading About golden parachute

SearchCompliance
  • OPSEC (operations security)

    OPSEC (operations security) is a security and risk management process and strategy that classifies information, then determines ...

  • smart contract

    A smart contract is a decentralized application that executes business logic in response to events.

  • compliance risk

    Compliance risk is an organization's potential exposure to legal penalties, financial forfeiture and material loss, resulting ...

SearchSecurity
  • private key

    A private key, also known as a secret key, is a variable in cryptography that is used with an algorithm to encrypt and decrypt ...

  • DOS (disk operating system)

    A DOS, or disk operating system, is an operating system that runs from a disk drive. The term can also refer to a particular ...

  • security token

    A security token is a physical or digital device that provides two-factor authentication for a user to prove their identity in a ...

SearchHealthIT
SearchDisasterRecovery
  • What is risk mitigation?

    Risk mitigation is a strategy to prepare for and lessen the effects of threats faced by a business.

  • change control

    Change control is a systematic approach to managing all changes made to a product or system.

  • disaster recovery (DR)

    Disaster recovery (DR) is an organization's ability to respond to and recover from an event that affects business operations.

SearchStorage
  • What is RAID 6?

    RAID 6, also known as double-parity RAID, uses two parity stripes on each disk. It allows for two disk failures within the RAID ...

  • PCIe SSD (PCIe solid-state drive)

    A PCIe SSD (PCIe solid-state drive) is a high-speed expansion card that attaches a computer to its peripherals.

  • VRAM (video RAM)

    VRAM (video RAM) refers to any type of random access memory (RAM) specifically used to store image data for a computer display.

Close