A golden parachute is a benefit of employment that is provided, typically to top executives, as a compensation arrangement if the employee is [Page 803]terminated or forced out of a company during a specific period of time. Golden parachutes are different from severance packages as a severance package is usually something like a week’s pay per year of employment with the company in the event the employee is laid off or the company closes. Some executives, of course, earn more than a week’s pay per year of employment and may receive up to 12 months of salary, or more, in a severance package.

The term golden parachute usually refers to the very large severance contracts that are offered to top executives. Top candidates may be offered ...