# Golden Parachute

*Corporate Finance & M&A — Finicade finance glossary*

A golden parachute is a large payout to executives if they lose their jobs after a takeover. The stated rationale is to make management indifferent to being acquired, so they evaluate offers on shareholders' behalf rather than defending their own positions. The criticism is that it rewards failure, and that the sums involved can be large enough to distort the very judgement they were meant to neutralise.

**Also known as:** change of control payment, severance package for executives

**Related terms:** [Hostile Takeover](https://finicade.com/glossary/hostile-takeover), [Corporate Governance](https://finicade.com/glossary/corporate-governance), [Agency Problem](https://finicade.com/glossary/agency-problem), [Severance Pay](https://finicade.com/glossary/severance-pay), [Mergers and Acquisitions (M&A)](https://finicade.com/glossary/mergers-and-acquisitions)

Source: https://finicade.com/glossary/golden-parachute