Golden Parachute

Golden Parachute

A golden parachute refers to a generous compensation package promised to a senior executive in the event that the executive leaves the company. It is a contractual agreement between the company and the employee. The contract stipulates the conditions under which the executive will receive it. Some of the conditions may include the following:

The compensation package may include the following

Advantages and Disadvantages

A golden parachute can make it easier for a company to attract and retain talented executives. A golden parachute can also discourage takeovers by increasing the cost of the takeover.
On the other hand, if they are dismissed due to poor performance, then companies still often provide excessive compensation for executives. Also, the cost of it may not discourage takeovers because it may be an insignificant cost compared to the overall cost of the takeover.


The golden parachute protects the company much like a CFO protects and guides the CEO. If you’re interested in becoming the trusted advisor your CEO needs, download your free How to be a Wingman guide here.
golden parachute
[box]Strategic CFO Lab Member Extra
Access your Projections Execution Plan in SCFO Lab. The step-by-step plan to get ahead of your cash flow.
Click here to access your Execution Plan. Not a Lab Member?
Click here to learn more about SCFO Labs[/box]
golden parachute
See Also:
How to Compensate Sales Staff
How to Keep Your Corporate Veil Closed
Corporate Veil
Employee Stock Ownership Plan (ESOP)
Intrinsic Value- Stock Options
How to Hire New Employees

ARTICLES YOU MIGHT LIKE

The Accounting Gap Between Large and Small Companies

The Accounting Gap: It’s unfortunate, but true. A large gap exists between the accounting departments of large or publicly traded companies and smaller or private companies. In our past 25 years of consulting we’ve noticed that more often than not, these smaller/private companies will fill the gap with Bookkeepers, rather than the degreed Accountants/CPAs they

Read More »

The Struggles of Private Company Accounting

Building your Accounting Department… When I meet a business owner operating at a successful $10+ mil in revenue I often hear them say “My CPA…” and I immediately know they are referring to a tax CPA. One thing ALL entrepreneurs have in common is that they have to file a tax return. So from day

Read More »

What the Current Hiring Process Costs

It’s hard for companies to realize how much they are actually spending when it comes to hiring a new employee. Once they decide it’s time to pursue a new worker, a lot of resources are used to find the perfect candidate for the job. Finding the perfect candidate within a vast number of people might

Read More »

JOIN OUR NEXT SERIES

Financial Leadership Workshop

MARCH 28TH-31ST 2022

THE ART OF THE CFO®

Financial Leadership Workshop

Days
Hours
Min

June 12-15th, 2023

SHARE THIS ARTICLE
WIKI CFO® - Browse hundreds of articles