Stock Lingo, Golden Parachute

This is a good one to add to the stock lingo collection here at Stock Trading 101. A golden parachute is a term used to describe what top executives get which are crazy benefits when their company gets taken over (bought out, whatever) by another company, and they lose their jobs.

So, really this plays out something along the lines of this, you are a top executive at a major publicly traded company, and your company gets bought out. Well, the new head hancho comes in and finds that you will not be suitable for the job anymore and decides you need to leave. BUT, that isn’t a bad deal, you can jump ship, because unlike the rest of the work pyramid below you (who all just free fall), you are an exec, and execs get special treatment! What does this treatment come with? Your golden parachute is littered with everything from huge bonuses to stock options to severance pay for who knows how long, and probably a free sandwich or two on your way out.

In the end you are basically walking away in a nicer suit than what you wore when you came in, and I can’t imagine finding a new job would be THAT difficult. Your parachute will have you floating for a long time before you have to worry about much. And to top it all off, the next job you get as the exec of another company will have you rewarded with another golden parachute.