High severance pay for top managers

Other Names:
Golden parachute severance agreements
Managing directors and other top managers are often guaranteed from one half to one full year's salary at the conclusion of their contracts. This could be more than $1 million in addition to salary after only 2 or 3 years work. There is little evidence that a single manager adds this level of profitability to any company.
In 1991, more than half of the biggest US companies had "golden parachute" severance agreements, an increase from 35% in 1987.
High severance pay for managers is just a way for fellow directors to pave the way for their own high severance pay. It buys the loyalty for a year of the manager while they are at another company thus assuring secrets from one company don't go to another along with the executive.
Counter Claim:
High severance pay of a departing manager reassures managers staying with the company that they too will be treated well when they leave or retire.
Problem Type:
E: Emanations of other problems
Related UN Sustainable Development Goals:
GOAL 8: Decent Work and Economic GrowthGOAL 9: Industry, Innovation and InfrastructureGOAL 16: Peace and Justice Strong Institutions
Date of last update
01.01.2000 – 00:00 CET