golden parachute: meaning, definition, pronunciation and examples
C2Formal, Business/Finance
Quick answer
What does “golden parachute” mean?
A clause in an executive's contract guaranteeing substantial benefits if the company is taken over or the executive is dismissed.
Audio
Pronunciation
Definition
Meaning and Definition
A clause in an executive's contract guaranteeing substantial benefits if the company is taken over or the executive is dismissed.
Any lucrative financial arrangement or generous severance package given to a senior executive or key employee upon involuntary termination, especially following a merger or acquisition.
Dialectal Variation
British vs American Usage
Differences
Primarily identical in meaning and usage. The term originated in and is most frequently used in American business contexts.
Connotations
Both regions carry negative connotations of corporate excess and rewarding failure. In UK media, it is often cited as an example of 'fat cat' culture.
Frequency
Much more frequent in American English business journalism and corporate law. Gaining frequency in UK English, especially in financial reporting.
Grammar
How to Use “golden parachute” in a Sentence
The [company] offered/granted a golden parachute to the [CEO].The [executive]'s contract contained a golden parachute.The [merger] triggered the golden parachute.Vocabulary
Collocations
Examples
Examples of “golden parachute” in a Sentence
verb
British English
- The outgoing chairman was generously parachuted out with a multi-million pound settlement.
American English
- The board voted to golden-parachute the entire C-suite as part of the merger agreement.
adjective
British English
- He secured a golden-parachute clause in his new service agreement.
American English
- The golden-parachute provisions were detailed in the proxy statement.
Usage
Meaning in Context
Business
The board approved a golden parachute worth $20 million to secure the CEO's cooperation during the acquisition.
Academic
Golden parachutes are a central topic in agency theory, examining conflicts between executives and shareholders.
Everyday
When the company was sold, the boss got a golden parachute, but hundreds of us lost our jobs.
Technical
The change-in-control provisions constitute a golden parachute under Section 280G of the Internal Revenue Code.
Vocabulary
Synonyms of “golden parachute”
Strong
Neutral
Weak
Vocabulary
Antonyms of “golden parachute”
Watch out
Common Mistakes When Using “golden parachute”
- Using 'golden parachute' to refer to any large bonus (it is specifically for involuntary termination after a takeover/dismissal).
- Spelling error: 'golden parachut'.
FAQ
Frequently Asked Questions
Not exactly. A golden parachute is a specific type of very lucrative severance package triggered primarily by a change in company control (like a takeover), not just any dismissal.
Yes, they are legal contractual agreements. However, they are often regulated (e.g., tax implications in the US) and can be challenged by shareholders.
Usually top-level executives like CEOs, CFOs, and other C-suite officers, though sometimes key employees or board members may have them.
They are controversial because they can provide enormous payouts to executives even when a company performs poorly or fails, seen as rewarding failure and misaligning executive/shareholder interests.
A clause in an executive's contract guaranteeing substantial benefits if the company is taken over or the executive is dismissed.
Golden parachute is usually formal, business/finance in register.
Golden parachute: in British English it is pronounced /ˌɡəʊl.dən ˈpær.ə.ʃuːt/, and in American English it is pronounced /ˌɡoʊl.dən ˈpær.ə.ʃuːt/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “soft landing”
- “pay for failure”
Learning
Memory Aids
Mnemonic
Think of a highly paid CEO jumping from a failing corporate 'plane' (the company). Instead of a regular parachute, theirs is made of 'gold' (money), ensuring a very cushioned and wealthy landing.
Conceptual Metaphor
CORPORATE FAILURE IS A PLANE CRASH; EXECUTIVE PROTECTION IS A (GOLDEN) PARACHUTE.
Practice
Quiz
What is the primary purpose of a golden parachute?