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Definition: a Golden Parachute is a form of employee benefits or executive compensation, wherein the executive is provided with a lucrative severance package in the event of job termination, for example in case of a takeover by an acquiring company. A GP may include a continuation of salary, bonus and/or certain benefits and perquisites, as well as accelerated vesting of stock options.
It can be used as a defensive measure used to prevent hostile takeovers. With GPs, employers enter into agreements with key executives and agree to pay amounts in excess of their usual compensation in the event that control of the employer changes or there is a change in the ownership of a substantial portion of the employer's assets.