Texas executives commonly will work to negotiate a golden parachute agreement to help protect their financial interests in the event that they lose their job. If you’re new to the executive level or you don’t currently have a golden parachute agreement, it’s time to consider getting one. Here are a few different tips that you can use to ensure that your agreement is in your best interests.
Understanding a golden parachute agreement
Employment law defines a golden parachute agreement as a substantial benefits package that is typically available to top-level executives. This agreement becomes enacted when a company is taken over by another firm and the executive loses their job. Golden parachutes are a key anti-takeover measure that companies can use to discourage an unwanted acquisition.
Items included in a golden parachute agreement
Golden parachute agreements can include many different items. Some of the most common include severance pay, special bonuses, vesting of compensation and even stock options. Some executives may also include continued enrollment in pension plans, vesting of retirement accounts, paid health insurance, and compensation for any legal fees.
Concepts to consider
The whole concept behind a golden parachute agreement is that it’s meant to be a deterrent against a takeover of the company that you work for. For this reason, you need to think of your golden parachute agreement as going above and beyond what is monetarily necessary to compensate you for your termination if a takeover does happen. Only your employer can put restrictions on what they deem acceptable for your golden parachute agreement.
As an executive, you may be given the option to have a golden parachute agreement. While it may be very unlikely that a situation may occur where you get to enact that agreement, it’s still worth planning out. As always, you should consult an attorney before signing any sort of contract with your employer.