What is Golden Parachute ?
‘Golden Parachute’ refers to the significant severance packages provided to the employees when they leave the company. Although it had the legacy usage of being applied when there is a merger or acquisition, the definition has changed nowadays to include the termination for any reason.
The idea behind golden parachute is that it attracts talented candidates towards the company and position being offered. However, there are others who criticise it for the fact that it might also make talented candidates leave the organization if a competing company offers a better golden parachute.
Golden parachute is one of the most common forms of executive level incentive with ‘golden handcuffs‘ and ‘golden handshake’ being the other two.