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And the original golden parachutes were created to incentivize a good acquisition. A CEO whose company gets acquired is often firing himself. So the whole idea

And the original golden parachutes were created to incentivize a good acquisition. A CEO whose company gets acquired is often firing himself. So the whole idea was to give them a huge score if it happened. Otherwise CEOs might fight takeovers just to keep their jobs. And, if a lot of the CEO performance results is just luck, then bad luck can ruin them. If a company is on the brink of failure, nobody is going to take the job without a parachute. It could be their last job if they take the blame.

st3v3r 10y ago
So why not make the golden parachute "if we get acquired, you get this" instead of "if you get fired, you get this".
- pdeuchler 10y ago
  Because CEOs didn't get there by not knowing how to negotiate and insulate yourself from risk
- ohyes 10y ago
  What's to stop the board from firing him and then doing the acquisition to save the money that they would have had to pay him.
  - st3v3r 10y ago
    In theory? Not much. In reality? For one, that's a lot of work, especially to screw someone who did a decent job (presumably), who's compensation probably is a drop in the bucket compared to the stock price, and, let's be honest, has a chance to be on your board. The amount of incest in company boards is pretty high. So if you do it to them, there's a chance they'll do it to you.
- rhino369 10y ago
  They did originally. I think even now most big CEO's don't have a really huge golden parachute. And at a certain point, it's just differed compensation. Instead of 2 million a year and zero parachute, they get 1.75 million a year and a million dollar chute. There is also another form of golden parachute, which the person is getting paid for getting on a sinking ship. Otherwise nobody is going to become the CEO of a failing company. They are basically getting paid for the hit to their reputation.
- SeeDave 10y ago
  This exists, it's called a "Change in Control" arrangement.

st3v3r 10y ago

So why not make the golden parachute "if we get acquired, you get this" instead of "if you get fired, you get this".

pdeuchler 10y ago
Because CEOs didn't get there by not knowing how to negotiate and insulate yourself from risk
ohyes 10y ago
What's to stop the board from firing him and then doing the acquisition to save the money that they would have had to pay him.
- st3v3r 10y ago
  In theory? Not much. In reality? For one, that's a lot of work, especially to screw someone who did a decent job (presumably), who's compensation probably is a drop in the bucket compared to the stock price, and, let's be honest, has a chance to be on your board. The amount of incest in company boards is pretty high. So if you do it to them, there's a chance they'll do it to you.
rhino369 10y ago
They did originally. I think even now most big CEO's don't have a really huge golden parachute. And at a certain point, it's just differed compensation. Instead of 2 million a year and zero parachute, they get 1.75 million a year and a million dollar chute. There is also another form of golden parachute, which the person is getting paid for getting on a sinking ship. Otherwise nobody is going to become the CEO of a failing company. They are basically getting paid for the hit to their reputation.
SeeDave 10y ago
This exists, it's called a "Change in Control" arrangement.