Investor Glossary-golden parachuteInvestor Glossary-golden parachuteInvestor Glossary-golden parachuteInvestor Glossary-golden parachuteInsightful stock market charts - Click here
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Golden Parachute

The HTML to link to this page

A golden parachute is an employment agreement that guarantees a key executive of a company lucrative - even excessive -- compensation in the event the firm is taken over. The benefits a golden parachute may provide include a huge, one-time cash bonus, stock options, and pension. More than a few people view a golden parachute as simply another way senior executives enrich themselves. But a golden parachute can actually serve several, sometimes conflicting, purposes. A golden parachute may attract and hold senior executives who might otherwise be reluctant to work for a possible takeover target. And because senior executives are compensated upon sale, a golden parachute may make them more willing to protect shareholder interests by selling the company. But a golden parachute can also discourage corporate takeovers: After adding in the costs of a golden parachute, a potential suitor may decide to drop a takeover bid. Recognizing the biases a golden parachute can engender, in 1984 Congress amended the IRS code to discourage golden parachute plans. But a golden parachute feature is still included in many executive contracts.

Rate this golden parachute definition...

Learn about investing with the Investor Glossary Term of the Day

Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.

Popular Terms: option premium, command economy, retained earnings, deferred revenue, risk management, 401a, dividends payable, 1031 exchange, Zero Cost Collar, annual return, covered put, per diem, 144a, APR, liquidity ratio, FTSE, current ratio, average price per share, reverse mortgage, real GDP, limit order, stock market close, stock split, wholly-owned subsidiary, deferred tax, in escrow, labor relations, required rate of return, debt service coverage, FICO score, implied volatility, EBITDA, quality assurance, cancelled check, minority interest, margin rate, balance sheet, ex-dividend, class C shares, irrevocable trust, open position, 1035 exchange, phantom income, ex-dividend date, inflation, diluted share, VIX, Key Rate Duration, LIBOR

Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use