The corporate sector of American industry is known for its incredible volume of wealth. Most successful corporations pay their executives a lucrative income while providing additional financial benefits.
Corporate employment agreements or contracts contain many details executives should understand before signing. Sometimes, these agreements also address severance pay for exiting executives.
What is a golden parachute?
For the uninitiated, a golden parachute refers to the generous severance package given to corporate executives if a sudden employment termination occurs. Historically, even misconduct did not bar some executives from receiving severance pay valued at millions of dollars.
Do companies still offer them?
Perhaps, but more and more non-executive employees and corporate shareholders have taken a stance against golden parachutes. Reasons for this shift of opinion include:
- They appear to reward some departing executives for a job poorly done
- They are unfair to company employees receiving substantially less severance
- They benefit corporate employees who have engaged in criminal or unethical conduct
Still, lucrative severance packages have not fallen completely to the wayside. Companies know these agreements attract top-quality executives prepared to contribute their loyalty, skills and knowledge for the long-term good of the company.
Ensure your severance agreement is fair
A fair severance package should reflect your unique contributions, but it should also reflect the values of the company. Whether severance is addressed in your employment contract or via a separate agreement, consider getting a professional review.