Which term describes a substantial payout guaranteed to an executive if the company is acquired and the executive's employment ends?

Which term describes a substantial payout guaranteed to an executive if the company is acquired and the executive's employment ends?

• A. Golden goose
• B. Golden fleece
• C. Golden parachute
• D. Golden handshake

Answer: (C)

A golden parachute is a substantial payout guaranteed to an executive if the company is acquired and the executive’s employment ends. It’s designed to protect the executive during a change in control, providing financial security when ownership changes and leadership might be replaced. These arrangements often include severance pay, continued benefits, and accelerated vesting of stock or options, and they may be triggered by termination or resignation following a takeover. This concept helps reassure top management and can smooth the path for mergers or acquisitions by reducing resistance from executives. The other terms aren’t the same idea. A golden handshake is typically a severance given when someone leaves the company under ordinary circumstances, not specifically tied to an acquisition. Golden fleece and golden goose refer to different notions altogether—one is a mythic or valuable prize, the other a source of ongoing profit—rather than a standardized compensation agreement.

A golden parachute is a substantial payout guaranteed to an executive if the company is acquired and the executive’s employment ends. It’s designed to protect the executive during a change in control, providing financial security when ownership changes and leadership might be replaced. These arrangements often include severance pay, continued benefits, and accelerated vesting of stock or options, and they may be triggered by termination or resignation following a takeover. This concept helps reassure top management and can smooth the path for mergers or acquisitions by reducing resistance from executives.

The other terms aren’t the same idea. A golden handshake is typically a severance given when someone leaves the company under ordinary circumstances, not specifically tied to an acquisition. Golden fleece and golden goose refer to different notions altogether—one is a mythic or valuable prize, the other a source of ongoing profit—rather than a standardized compensation agreement.