Named so because their aim is to provide a soft landing for employees at higher levels who have lost their jobs
Benefits may include cash bonus, insurance, stock option, severance pay, pension package
Compensation is usually thrice the annual basic salary of top executives
Disadvantages
Controversial practice
Lucrative for short-lived CEOs and low-performance executives, who get paid large sums for less or poor work
The target company becomes less attractive when the Golden Parachute cost is a lot higher for the acquiring company
Examples
Dell Inc.'s merger with EMC Corporation compensated EMC's CEO with $27 million
CEO Meg Whitman of HP may receive over $9 million if there is a change of control at the company and more than $51 million if she is terminated
If in May 2016, the federal court had not blocked the merger, Staples Inc. and Office Depot Inc's merger would have resulted in Office Depot's CEO collecting $39 million
Similar Terms
Golden Handshake
A contract clause wherein the employer provides a significant severance package to the employees who have lost their jobs
Golden Coffin
A death benefit package awarded to the heirs of high-ranking executives who pass away during employment
Silver Parachute
Special compensation for specific employees when their position becomes redundant in the company
