1

Golden Parachutes

A Golden Parachute is a financial incentive paid to a high-ranking executive in the form of a generous severance and other benefits in the event that the company is sold, merges with another firm or otherwise changes leadership.

2

Golden Life Jackets

In a company merger, the acquiring company may desire to offer a substantial compensation package to key executives of the company being acquired to induce them to remain on board. Sometimes called golden life jackets, these alternatives to parachutes may provide for continuity of management in the merged enterprise but may also impact upon shareholders' interests.

3

Golden Handshakes

A golden handshake usually consists of a clause in an executive's employment contract that provides a generous severance package if the executive loses his job, but not necessarily through a merger or acquisition. A golden handshake could be paid to an executive who is fired or dismissed as part of a reorganization of the business. It could be paid when an executive compensation contract expires by its own terms and the board of directors chooses not to renew it, or to buy out the contract early. It could be awarded as part of the executive's scheduled retirement or to encourage an earlier retirement.