Golden Parachutes Employee Stock Employer Person Terminated Provide

A "golden parachute" is an agreement between an employer and an employee that states that the employee will receive certain benefits if he or she is "terminated" (fired; told to leave the job). A "parachute" is a large piece of fabric that slows down one's fall through the air, as when a person jumps out of an airplane or when a "space shuttle" (vehicle that travels into space) returns to earth. In a similar way, a "golden parachute" provides a "soft landing" (low impact) when an employee is terminated. "In effect" (in reality; what actually happens), the employer pays the employee if he or she is terminated.

Golden parachutes can provide many different types of "compensation" (payments). They could provide simple cash payments, but more complicated arrangements could offer "stock options" (the possibility of buying stock in the future at a given price, no matter how much stock is actually worth at that time, usually allowing the recipient to buy stock at much less than it is worth).

"Supporters" (people who like something) of golden parachutes argue that they make it easier for companies to hire "talented" (very good at what they do) "executives" (top managers and decision-makers in a business) and that they help executives make less "biased" (favoring one person or organization) decisions during mergers and acquisitions that might result in them losing their job. In contrast, "opponents" (people who do not like something) of golden parachutes argue that they are unfair, because executives needs to accept the "risk" (the likelihood that a bad things might happen) of losing their job just like everyone else.