Meaning
A large payout guaranteed to a senior executive who loses their job - severance, cash bonuses, stock options - typically triggered when a merger or takeover sweeps them out of the company. More broadly it describes any lavish exit package, and the phrase usually carries a note of public indignation at rewards for failure. Business journalism register, almost always with a critical edge; keep distinct from golden handshake, the more generous British cousin covering retirement as well as dismissal. Regional use: General English; American corporate origin.
Origin
The image is of an executive floating gently away from a crashing company, protected by a canopy of gold. The first use of the term is usually traced to 1961, when creditors trying to remove Howard Hughes from control of Trans World Airlines gave Charles C. Tillinghast Jr. a contract containing a clause paying him handsomely if he lost his job. The device spread rapidly in the hostile-takeover wave of the early 1980s - by 1981 roughly one in seven of the 250 largest US corporations had such agreements - and the backlash followed: the Deficit Reduction Act of 1984 and the excise-tax regime around it, SEC disclosure rules, the Dodd-Frank Act's shareholder votes in 2010, and a 2013 Swiss referendum that outlawed golden parachutes outright. Cambridge now defines it simply as a large payment to someone forced out of an important company job, especially in a takeover.
Research Sources
References used to check this entry’s meaning, history, or documented forms.
Variants
- golden parachute package
- golden parachutes
- parachute clause
Usage Examples
- Shareholders voted down the payout, but the director's golden parachute had been written into his contract years earlier.
- The airline's chief executive drifted away under a golden parachute worth eleven million dollars while the pension fund collapsed.
- Every merger rumor renews the argument over golden parachutes and what, exactly, executives are being paid to survive.